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James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed shortly before the regular session opening on Friday. The price action suggests investors may be positioning themselves ahead the release of today’s U.S. Non-Farm Payrolls report at 12:30 GMT and data on ISM Manufacturing PMI, Construction Spending and ISM Manufacturing Prices.

At 09:07 GMT, December WTI crude oil is trading $54.49, up $0.31 or +0.55% and December Brent crude oil is at $60.20, down $0.03 or -0.05%. Both markets are also in a position to close lower for the week.

Prices are under pressure on Friday because of worries over global economic growth, along with oil demand. Earlier in the week, an official report from China showed the manufacturing sector remained in negative territory for the sixth month in a row.

The manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics (NBS) on Thursday, stood at 49.3 in October, down from 49.8 in September and below the expectation in a Bloomberg survey of analysts for an unchanged reading. The October figure was the lowest since hitting 49.2 in February.

There was a little relief early Friday, however, after an unexpected bounce in a private sector survey of Chinese manufacturing activity on Friday, which contrasted with the gloomy results in the official survey Thursday.

Japanese factory activity, however, sank to more than a three-year low in October, data showed on Friday, in a fresh warning sign for the world’s third-largest economy.

Finally, Wednesday’s EIA weekly inventories report came in bearish with a rise of 5.7 million barrels in the week to October 25, trouncing analyst expectations for an increase of just 494,000 barrels.

Reuters reported that OPEC production recovered in October from an eight-year low and U.S. crude production soared nearly 600K barrels per day in August to a record 12.4 million.

Daily Forecast

All eyes are on the Non-Farm Payrolls report and the Final Manufacturing at 12:30 GMT and 14:00 GMT respectively.

The headline number in the jobs report is expected to show the economy added only 90K jobs in October. The unemployment rate is expected to edge higher to 3.6% and Average Hourly Earnings is expected to have risen by 0.3%.

Final Manufacturing PMI is expected to come in at 49.0, still below the contraction line, but better than last month’s previous reading.

Weak data could pressure crude oil prices because this would highlight the expected drop in future demand.

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