Oil prices dropped by over one dollar to levels below US$76 under pressure from a stronger dollar which outweighed reaction from better-than-expected US jobs data.
Crude futures in New York fell to US$75.4, while Brent crude fell to US$77.5 as the dollar rose against the yen and the euro, making dollar-denominated commodities like crude more expensive for holders of other currencies, pressurizing prices.
In earlier trading, crude rose to levels around US$78 after the US Labor Department reported that employers cut only 11,000 jobs last month, the fewest in nearly two years. The jobless rate edged down to 10%. This is the best official reading in job losses since December 2007 when the economy entered recession, raising hopes for a revival of US energy demand. These figures suggest the economy is nearing job growth needed to sustain a fragile recovery from the recession.
High oil inventory levels in the United States, especially at the delivery point of U.S. crude at Cushing, Oklahoma, have been putting more pressure on US oil prices than on North Sea benchmark Brent crude.
OPEC leader advices members to be cautious as they need to balance signs of economic recovery and abundant supplies. Oil inventories persist above five-year average and there were 165 million barrels of crude and products floating at sea, equal to almost two days’ global demand and more than some estimates. The group opines that the current price band of US$70-80 is satisfactory.