Crude oil off the lows after U.S. jobs data; Fed minutes eyed

Shutterstock photo - Crude oil futures eased down modestly during U.S. morning trade on Thursday, as investors reacted to contradicting U.S. employment data, while concerns over further budgetary battles facing the U.S. came into focus.

Official data showing that service sector activity in China expanded for the third consecutive month in December helped limit losses.

On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD93.05 a barrel during U.S. morning trade, down 0.1% on the day.

New York-traded oil prices fell by as much as 0.6% earlier in the session to trade at a daily low of USD92.50 a barrel. Oil futures touched USD93.82 a barrel on Wednesday, the strongest level since September 19.

Oil prices came off the lows after payroll processing firm ADP said that non-farm private employment rose by a seasonally adjusted 215,000 in December, above expectations for an increase of 133,000.

The previous month's figure was revised up to a gain of 148,000 from a previously reported increase of 118,000.

Separately, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending December 29 rose by 10,000 to a seasonally adjusted 372,000, compared to expectations for a decline of 7,000 to 355,000.

Jobless claims for the preceding week were revised up to 362,000 from a previously reported 350,000,

Market players were now eyeing the release of the minutes of the Federal Reserve's most recent policy-setting meeting.

At that meeting, the Fed pledged to keep interest rates at near-zero levels so long as the unemployment rate is above 6.5% and provided inflation in the year or two ahead is below 2.5%.

Traders also looked ahead to Friday's highly-anticipated data on U.S. nonfarm payrolls, as investors attempt to gauge the strength of the country's economic recovery.

Oil traders also anticipated fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Friday's government report could show crude stockpiles fell by 1.9 million barrels.

The report comes out two days later than usual due to the New Year's holiday.

Meanwhile, investors remained concerned over the longer term fiscal outlook in the U.S., with negotiations on raising the U.S. debt ceiling still to come in February.

Echoing the growing nervousness over the debt ceiling debate, a spokesman from the International Monetary Fund warned that "more remains to be done" to lower the U.S. debt load.

Rating agency Moody's said Wednesday that avoiding the fiscal cliff was only the first in a number of steps needed to ensure that the U.S. kept its coveted triple-A rating.

Standard & Poor's, which downgraded the U.S. to AA+ from AAA in August 2011, said the deal had done little to alter the country's negative credit outlook.

Oil's losses were limited after official data released earlier showed that China's services Purchasing Managers' Index expanded for the third consecutive month in December.

The services PMI rose to 56.1 last month from 55.6 in November, according to the National Bureau of Statistics.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand in recent years.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery fell 0.3% to trade at USD112.08 a barrel, with the spread between the Brent and crude contracts standing at USD19.03 a barrel. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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