Swelling petrol stockpiles and a larger than expected rise in unemployment in the world's biggest economy have driven crude to its lowest level this week.
Rising US unemployment weighs on oil
Swelling petrol stockpiles and a larger than expected rise in unemployment in the world's biggest economy have driven crude to its lowest level this week. The US benchmark crude fell below US$67 per barrel today in New York, after government data showed the US unemployment rate had risen to 9.5 per cent in June as employers cut 467,000 jobs. It had risen above $72 earlier in the week, as Nigerian militants continued attacking pipelines and oil installations, forcing Africa's biggest oil exporter to curtail as much as 700,000 barrels per day of output.
But the tide turned yesterday after the US Energy Information Administration reported a 2.3 million barrel increase last week in US petrol stocks, with diesel inventories also raising sharply, despite a 3.7 million barrel decline in stored crude. Traders viewed the big reserve of motor fuel ahead of the US July 4 Independence Day holiday, which traditionally marks the peak of the US summer driving season, as a sign of further economic weakness.
"There's a sense we're breaking to the downside because of weak economic data: unemployment, house prices, lower stock markets," Christopher Bellew, a broker with Bache Commodities in London, told Reuters. email@example.com