Bloomberg News

Crude Trades Near $100 Before U.S. Jobs Report, OPEC Meeting

June 03, 2011

June 3 (Bloomberg) -- Oil traded near $100 a barrel in New York, little changed from a week ago, before a report that will indicate the strength of the U.S. economy and as OPEC prepares to meet in Vienna next week to decide output quotas.

Futures have fluctuated from $98 to $103 a barrel this week. The U.S. Labor Department will say today that employers added fewer jobs in May, according to a Bloomberg News survey. The Organization of Petroleum Exporting Countries will respond if the world needs more crude, Saudi Arabian Oil Minister Ali Al-Naimi said before the group meets June 8.

“The market has defined a range as we head toward the unemployment rate tonight,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 this year. “It might get good numbers. It’s a volatile market.”

Crude for July delivery traded at $100.35 a barrel, down 5 cents, in electronic trading on the New York Mercantile Exchange at 2:34 p.m. in Singapore. It earlier rose as much as 47 cents and fell as much as 15 cents. The contract yesterday gained 11 cents to $100.40. Prices are up 35 percent the past year.

Brent crude for July delivery was unchanged at $115.54 a barrel on the London-based ICE Futures Europe exchange. The contract yesterday rose $1.01, or 0.9 percent.

U.S. Jobs

The European benchmark contract traded at a premium of $15.14 a barrel to U.S. futures, little changed from yesterday. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. The spread averaged 76 cents last year.

U.S. job growth probably slowed to 165,000 new employees in May from 244,000 in April, a Bloomberg News survey of economists showed before today’s Labor Department report.

“If analysts are correct, May would mark the smallest increase since January, a month which traditionally sees low hiring,” said Stephen Schork, president of The Schork Group Inc. in Villanova, Pennsylvania, in a report today. “Put simply, we are expecting extreme volatility around the number’s release at 8:30 a.m. Expect the Nymex pits to open wild.”

Initial jobless claims in the week ended May 28 fell by 6,000 to 422,000, above the 417,000 median forecast of economists surveyed by Bloomberg News, according to Labor Department figures yesterday in Washington.

OPEC Meeting

OPEC will probably maintain production levels for an eighth consecutive meeting next week, resisting calls to ease the pressure of $100-a-barrel oil on the global economy, according to a survey of analysts by Bloomberg News.

“Speculation on what the future may hold” is the main reason for the current oil price, Saudi Arabia’s Al-Naimi told reporters in Poland yesterday. “There is no such thing as a fair price.”

Oil fell in intraday trade yesterday after a U.S. Department of Energy report showed crude stockpiles climbed 2.88 million barrels to 373.8 million last week, the highest since May 2009. Supplies were projected to fall by 1.6 million barrels, according to the median of 13 analyst estimates in a Bloomberg News survey.

Gasoline inventories increased for a fourth week, climbing by 2.55 million barrels to 212.3 million, the report showed. Analysts expected a gain of 900,000 barrels, according to the Bloomberg survey. Demand increased 4.5 percent to 9.43 million barrels a day.

Distillate stockpiles, which include diesel and heating oil, fell 976,000 barrels to 140.1 million, the lowest level since April 2009. Analysts forecast a withdrawal of 250,000 barrels.

--With assistance by Christian Schmollinger in Singapore. Editors: Paul Gordon, Ryan Woo

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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