Oil prices recover before US jobs report

March 6, 2009
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, LONDON, March  6 – Oil prices recovered slightly on Friday from recent falls but traders remained on alert ahead of a key US unemployment report that could send the market tumbling lower again, analysts warned.

New York\’s main futures contract, light sweet crude for delivery in April, won 1.10 dollars to 44.71 dollars a barrel.

Brent North Sea crude for delivery in April rose 69 cents to 44.33 dollars a barrel in late morning London trade.

Official data due at 1330 GMT on Friday was expected to show that the United States economy — the world\’s biggest energy consumer — shed about 650,000 jobs in February, traders said.

The "oil market… looks set to stay sensitive to any piece of economic data," said ODL analyst Marius Paun, cited by Dow Jones Newswires.

"A negative surprise may pose an obstacle to further gains in the energy complex and could potentially trigger new falls."

Oil dived lower Thursday as investors took profits and appeared dismayed that China, the biggest energy consumer after the United States, did not deliver new hoped-for stimulus measures.

Prices had won support earlier this week as markets buzzed in anticipation of an imminent stimulus announcement by China that did not materialise.

Traders\’ disappointment was mirrored in global stock markets, where sentiment also took a hit from economic and business news.

On Friday, Asian stocks fell sharply again on fresh economic gloom after Wall Street hit a fresh 12-year low, but Europe steadied ahead of the weekend and the key US jobs report.

Traders were fretting that American oil demand will be hit severely if the country\’s recession worsens.

The energy market was meanwhile moving its focus towards the upcoming production meeting of ministers from the Organization of Petroleum Exporting Countries (OPEC) in Vienna on March 15.

OPEC, which pumps 40 percent of the world\’s oil, cut output late last year by a total 4.2 million barrels per day in a bid to reverse tumbling prices and protect its revenues.

"OPEC\’s meeting is little over a week away now with the likelihood that the group will have to curb production further to support prices," added analysts at British energy consultancy John Hall Associates.

At the start of the week, prices had plunged Monday after more alarming news in the financial sector sent markets into a tailspin, amid fears of a deepening downward economic spiral.

Investors also reacted to news of another massive government bailout for American International Group. The latest AIG rescue, worth 30 billion dollars, came as the US insurer posted a 61.7 billion dollar quarterly loss — the biggest in US corporate history.

Crude oil futures then rebounded Tuesday as the market reconsidered worries about weak US energy demand.

The market continued to bounce higher Wednesday on news of sliding American crude reserves, which indicated solid demand, traders said.

The US government\’s Energy Information Administration (EIA) said crude oil stockpiles sank 700,000 barrels in the week ending February 27. Market expectations had been for a gain of one million barrels.

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