Oil prices gave up gains late in the trading session after trading green most of the day. Crude oil eased 3 points to 32.34 and Brent oil drifted 25 cents
Wall Street fluctuated on Thursday as equities tracked oil prices. Oil pared earlier gains but remained steady after jumping 7 percent on Wednesday as the dollar weakened after weak U.S. data and comments from a Fed policymaker signaled that further rate hikes could be delayed.
“In the short term, we really need to see a decent payroll number tomorrow and for earnings season to conclude with no major surprises,” said Bill Merz, investment strategist at U.S. Bank Wealth Management. The keenly awaited monthly employment data is scheduled for release on Friday.
“More importantly, investors need to start feeling as though oil is stabilizing or at least nearing a bottom before the volatility in the market can subside.”
Wall Street opened lower after data showed that weekly jobless claims rose more than expected and nonfarm productivity fell in the fourth quarter at its fastest pace in more than a year.
New orders for U.S. factory goods also fell in December by the most in a year.
Several factors have played a part in pushing US crude oil prices below US$30/bbl., including high inventory levels of crude oil, uncertainty about global economic growth, volatility in equity and nonenergy commodity markets, and the potential for additional crude oil supply to enter the market, said the US Energy Information Administration. Crude oil and petroleum product inventories, both domestically and internationally, have been growing since mid-2014 and are above five-year averages for this date.
When inventories are high and rising, costs to store crude oil and petroleum products generally increase. In futures markets, where people can buy commodities for specific delivery times in future months, high storage costs often mean that long-term deliveries are priced higher than near-term deliveries, a situation known as contango. One metric for this is the difference in contract prices between the front month and the contract for one year out, known as the 13th-to-1st month spread.
China and the renewed fall in oil prices are the main preoccupations of the Eurozone countries. EU Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici has today presented the Winter 2016 Economic Forecast, and it appears that the European economy is now entering its fourth year of recovery and growth continues at a moderate rate, driven mainly by consumption.
Europe’s top economic authorities warned Thursday of dangers to the region’s economy amid slower growth in China, weaker global trade and heightened geopolitical uncertainties.
Mario Draghi, the head of the European Central Bank, said it was imperative to act swiftly to help the economy and lift inflation, while the European Union downgraded its growth forecast for the 19-country Eurozone this year.