Crude Oil Price Weakens as Investors Take Profits Ahead of US Employment Data
Crude oil price retreats below 70 as investors take profit ahead of the US employment report. Indicators released earlier this week have been rather mixed and ‘employment’ components have surprised to the downside. Falls in stock markets and advance in USD indicate reduction in risk appetite.
Consensus forecast the number of payrolls probably dropped -187K in September after a -216K decline in the prior month. Unemployment should have risen to 9.8% from 9.7%. Indeed, several market participants (i.e. investment banks) have revised down their estimates after the disappointing ISM manufacturing data, Challenger employment and ADP employment change.
The employment component of the ISM manufacturing index dropped -0.2 points to 46.2, indicating no much improvement from the -63K drop (August) in manufacturing payrolls in September. In a report by the Confederation Board, consumer confidence index fell to 53.1 from 54.1. Meanwhile the labor differential, the % of people thinking jobs are plentiful vs the % of people thinking jobs are hard to get, widened to -43.6 from -40 in August. This suggested the outlook on job market remains weak.
ADP showed that employment plunged -254K in September, compared with consensus of -195K, from a revised -277K in August. Challenger jobs sank -30.2% yoy in September after a -13.8% decline a month ago.
Stock markets plummet in both Asian and European sessions. UK’s FTSE 100 Index opens lower and is currently dropping -1% to 4998. Germany’s DAX and France’s CAC 40 also falling -0.7% and -1.2% respectively. In Asia, the MSCI Asia Pacific Index slid -2.1% while Japan’s Nikkei 225 Stock Average dropped -2.5%.
Natural gas for November delivery remains under pressure after dropping -7.8% to settle at 4.466 Thursday after the US Energy Department reported gas storage increased +64 bcf to 3589 bcf in the week ended September 25. At current level gas inventory has set a new record high by exceeding the peak level of 3545 bcf in November 2007.
Gold price continues to trade below 1000 as USD strengthens further. Others in the precious metal complex also weaken with silver sliding for the second consecutive day, losing another -1.3% to 16.2 and platinum dropping another -1% to 1275.
US auto sales plunged -23% to an annualized rate of 9.22M in September, suggesting pullback in sales after the government’s ‘cash to clunker’ rebate program.
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