SINGAPORE- Oil prices fell in Asian trade Monday on concerns that disappointing US jobs data could affect demand in the world’s biggest economy.
New York’s main contract, West Texas Intermediate for February delivery eased 35 cents to $92.37 in afternoon trade while Brent North Sea crude for February dipped 18 cents to $107.07.
Financial markets were shocked by the US Labor Department’s jobs report for December, which showed the economy added a mere 74,000 jobs, well below the consensus estimate of 197,000.
The US unemployment rate dropped to 6.7 percent, from 7.0 percent in November, but that seemingly positive decline mainly reflected the fact that more people had given up looking for work, analysts said.
The health of the US economy is a key driver for crude prices because the United States is the world’s biggest oil consuming nation.
But while the jobs data was weaker than expected, it could also prompt the Federal Reserve to delay any further reduction in its stimulus programme at its next meeting later this month.
At its most recent meeting in December the bank’s policy committee said it would cut its bond-buying scheme by $10 billion a month to $75 billion in January, citing a pick-up in the economy.
Any delay to the tapering would put downward pressure on the US currency and make dollar-priced oil cheaper, boosting demand.
“The focus is still on the US jobs data,” said Kelly Teoh, market strategist at IG Markets Singapore.
“It has given a lot of people the idea that the pace of reducing stimulus will be decreased. So that risk of a faster pace of tapering has been taken away,” she told AFP.
Singapore-based Phillip Futures said oil prices were also under pressure after Iran and Western powers on Sunday said a landmark deal that curbs parts of Tehran’s disputed nuclear programme in exchange for sanctions relief will take effect from January 20.
The Islamic republic’s oil exports have been crippled by a series of international sanctions aimed at bringing an end to its nuclear drive, which the West claims is being used to develop atomic weapons. Iran denies the assertion.