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Crude oil edges lower, eyes on U.S. employment report

Published 09/07/2012, 02:52 AM
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Investing.com - Crude oil futures edged lower on Friday, after the European Central Bank unveiled a long awaited bond-purchasing program on Thursday, while investors awaited the release of a key U.S. jobs report later in the day.

On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD94.81 a barrel during European morning trade, adding 0.20%.

On Thursday, ECB President Mario Draghi unveiled a new bond purchasing program, dubbed Outright Monetary Transactions, which he said will provide "a fully effective backstop" against market volatility.

Under the terms of the plan, the ECB would buy unlimited amounts of government bonds of up to three years in maturity, as long as the country in question is signed up to the OMT program and agrees to economic reforms.

Prices also found support after the U.S. EIA said in its weekly report that U.S. crude oil inventories fell by 7.4 million barrels in the week ended August 31, compared to expectations for a decline of 5.3 million barrels.

Total U.S. crude oil inventories stood at 357.1 million barrels as of last week.

But speculation that prices may have risen too far pushed oil slightly lower on Friday, as investors eyed a U.S. employment report later in the day, after upbeat data painted a rather bright picture of the sector on Thursday, dampening expectations for near-term easing measures by the Federal Reserve.

Payroll processing firm ADP said on Thursday that U.S. non-farm private employment rose by a seasonally adjusted 201,000 in August, easily surpassing expectations for an increase of 140,000.

A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell by a more-than-expected 12,000 to a seasonally adjusted 365,000, compared to expectations for a decline of 7,000 to 370,000.

Also Thursday, the U.S. Institute of Supply Management said that service sector activity in the U.S. grew at a faster rate than expected in August, hitting the highest level since May.

The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery inched up 0.05% to trade at USD113.55 a barrel, with the spread between the Brent and crude contracts standing at USD18.74 a barrel.


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