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Friday, September 2, 2011

Commodity Corner: Oil Falls Amid Softer Demand Outlook

- Commodity Corner: Oil Falls Amid Softer Demand Outlook

Friday, September 02, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for October delivery lost nearly three percent Friday after the U.S. Department of Labor announced that the U.S. economy added zero jobs last month.

The WTI settled at $86.45 a barrel, a $2.48 day-on-day decline, after the Labor Department reported that the loss of 17,000 government jobs in August offset the addition of the same number of private-sector jobs during the period. According to media outlet MSNBC, the government last reported zero job growth 66 years ago. The Labor Department also announced that the unemployment rate held steady at 9.1 percent.

The unimpressive employment figures support the view that the U.S. economy is experiencing a double-dip recession, lowering expectations for oil demand.

Brent futures also ended the day lower, losing 1.7 percent to settle at $112.33 a barrel. The benchmark traded within a range from $111.57 to $113.51. The WTI peaked at $88.99 and bottomed out at $85.42.

By noon Friday, one-third of Gulf of Mexico natural gas production had been shut-in as Tropical Storm Lee ambled toward the Louisiana coastline. That was not enough to counter the aforementioned dismal economic prospects, however; October natural gas lost more than four percent Friday to settle at $3.87 per thousand cubic feet.

Front-month natural gas fluctuated from $3.85 to $4.065 during floor trading. Reformulated gasoline for October delivery lost a nickel to end the day at $2.84 a gallon after trading within a range from $2.795 to $2.90.

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