Oil falls ahead of week of 3Q earnings
Oil prices dropped below $69 a barrel Monday at the start of a week filled with third quarter company earnings reports that could hint at the health of the U.S. economy.
Benchmark crude for November deliver fell $1.34 to $68.61 on the New York Mercantile Exchange. The contract lost 87 cents to settle at $69.95 on Friday.
PFGBest analyst Phil Flynn said swelling U.S. crude supplies are staggering, but the dire state of the jobs market is also hitting the energy markets.
“Welcome to the jobless economic recovery that should reduce oil demand expectations even further as we look out into our future,” Flynn said in his morning report.
Weak economic data weighed on crude prices last week. The U.S. reported worse than expected manufacturing and jobs numbers, with the unemployment rate rising to 9.8 percent in September, the highest since 1983.
“Economic and oil data remain consistent with a macro economy just beginning to push off the trough, leaving markets with a lack of clear direction,” Goldman Sachs said in a report.
Federal Reserve Chairman Ben Bernanke last week said that even though the recession is technically over, the economy will feel weak for some time.
Analyst and trader Stephen Schork said he believes Bernanke.
“In other words, the residue of this recession will linger in the psyche of the American consumer — whose spending drives two-thirds of the U.S. economy — for quite some time to come,” Schork wrote in his morning report.
Meanwhile, the average price for a gallon of regular gasoline held steady overnight at $2.461, according to AAA, Wright Express and Oil Price Information Service. That’s 12.5 cents more than a month ago, but over $1.06 less than at this time last year.
The oil markets also slipped on geopolitical news out of Nigeria, where a rebel leader accepted a government amnesty offer to disarm. Unrest in the country has cut its oil production by a million barrels a day, allowing Angola to overtake it as Africa’s top oil producer.
Traders will eye the first earnings for the July-to-September period, with Aluminum producer Alcoa Inc., PepsiCo Inc. and Marriott International Inc. scheduled to report this week.
In other Nymex trading, heating oil fell 4.34 cents to $1.7534 a gallon. Gasoline for November delivery lost 3.53 cents at $1.7056 a gallon. Natural gas for November delivery gained 23 cents at $4.948 per 1,000 cubic feet.
In London, Brent crude fell $1.65 to $66.42 on the ICE Futures exchange.
Associated Press Writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.
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