Singapore: Oil extended gains in Asia today as a decline in US drilling pointed to a slowdown in production, but concerns over demand remain after a disappointing US jobs report.
A report from Baker Hughes Inc. said the number of active rigs in the United States fell by 26 to 614 last week, the lowest in five years, helping ease concerns over the global crude oversupply that has depressed prices. But poor unemployment data from the US continued to weigh on the market. The US Labor Department said on Friday that jobs growth in the world’s biggest economy and top oil consumer faltered in September and the labour market weakened across the board.
This has stoked concerns about demand for the commodity at a time when the Chinese economy is also slowing down amid a crude supply glut, analysts said. The US economy added a disappointing 142,000 jobs during the month, well below analyst estimates of 205,000 and the August jobs level of 173,000 was revised sharply lower to 136,000, surprising analysts. The July number also was lowered, bringing the average for the past three months to 167,000 jobs, lagging behind the 200,000-plus growth trend seen earlier in the year and in 2014.
The unemployment rate, measuring those without work but actively seeking jobs, was unchanged as expected at 5.1 per cent, the lowest level since 2008. The jobs data suggested that the US economy was being affected by the China-driven global slowdown and market volatility. In morning Asia trade, US benchmark West Texas Intermediate for November delivery was up 11 cents to USD 45.65 and Brent crude for November jumped 15 cents to USD 48.28 a barrel.