Oil futures prices fell on Friday, with West Texas Intermediate crude ending below $US40 a barrel for the first time in two months.
It was in fact the lowest settlement since early July and came ahead of a three day long weekend in the US, so no one was much interested in staying long in oil over the holiday break.
A three-day rally last week didn’t help commodities, but that faded on Friday after the August jobs report were OK on the surface – a new lower jobless rate of 8.4% and 1.37 million new jobs but that was sharply lower than the 1.8 million new jobs in July.
But continuing fears about demand for oil – especially an oversupply of diesel (distillates) which is produced when petrol is made in refineries and can’t be sold because industry, transport, and mining remain weak (petrol sales in the US have risen sharply because of the lowest summer prices since 2004).
West Texas Intermediate crude for October delivery fell $US1.60, or 3.9%, to settle at $US39.77 a barrel in New York. Prices were down 4.50% at the end of the session.
In Europe, November Brent the global benchmark, lost $US1.41, or 3.2%, at $US42.66 a barrel.
Both crude benchmarks settled at their lowest since July 9, based on the front-month contracts. WTI crude fell nearly 7.5% last week, after four consecutive weekly rises while Brent futures fell 6.9% weekly.
Data Friday from Baker Hughes, meanwhile, showed that the number of active US rigs drilling for oil rose by 1 to 181 last week, following a decline of 3 rigs last week.
While US oil stocks fell by 9.4 million barrels last week, the US Energy Information Administration (EIA) said that at 498.4 million barrels, US crude oil stocks are about 14% above the five year average for this time of year.
That is a sign of the continuing weak demand for energy.
Offsetting that was a 1.1 million barrels a day drop-in estimate US oil production to 9.7 million barrels a day.
Gold futures ended lower for a third session in a row on Friday, for a weekly loss of around 2%, as solid monthly US employment data helped.
Analysts saw the US jobs report as “a net positive for the economy” with the unemployment rate, a still high at 8.4%, is “trending in right direction.”
But that meant a negative for gold and silver.
The US added back 1.37 million jobs in August and the unemployment rate posted a surprisingly large decline to 8.4% from 10.2%, marking a fourth monthly fall in a row.
But the number of new jobs was sharply lower than 1.8 million in July and 4.8 million in June.
The US Dollar rose 0.25% last week against a basket of major trading currencies. The Aussie dollar ended at 72.80 US cents, down around 0.8% of a cent.
Comex December gold fell by $US3.50, or 0.2%, to settle at $US1,934.30 an ounce in New York.
Comex December silver fell 16 cents, or 0.6%, to settle at $US26.712, an ounce, following a 1.9% decline in the previous session.
For the week, gold fell 2.1% for the week, while silver fell 3.3% drop.
Elsewhere on Comex, December copper jumped 2.9% to $US3.062 a pound on Friday, with most-active contract prices up around 1.4% for the week.
Iron ore prices rose $US4.37 a tonne, or around 3.5% over the week to end at $US128.80 a tonne for 62% fe fines delivered to northern China.
