Oil Prices Buffeted In Narrow Range But End Week Little Changed
Oil Market Summary for: 08/30/2010 to 09/03/2010
Oil prices continued to move basically sideways as bullish and bearish news buffeted prices up and down in a narrow range.
The benchmark West Texas Intermediate futures contract settled Friday at $74.60 a barrel, off its lows for the day, and slightly lower than the $75.17 close a week earlier.
While stocks welcomed the new month with four days of gains, oil prices rose and fell depending not only on economic data but also on weather reports and another oil rig fire in the Gulf of Mexico.
Hurricane Earl developed into a Category 4 storm before weakening as it hit the U.S. East Coast. As the possible disruption to oil supply waned, crude oil prices fell.
However, a fire Thursday on a shallow-water oil drilling platform reawakened concerns that new government measures could restrict offshore drilling, pushing prices up, even though all workers were rescued and there were no immediate signs of an oil spill.
But the dominant influence on markets this week was the expected rise in the U.S. unemployment rate amid fears that the economic recovery is running out of steam. When the figures were finally released on Friday, markets reacted positively because the job loss was not as severe as forecast even though the jobless rate did rise to 9.6% from 9.5%.
Earlier in the week, the Institute for Supply Management's index of manufacturing activity showed a rise in August, alleviating concerns that all economic news was showing a downward trend. The positive U.S. news on Wednesday, echoed by a key manufacturing index in China, enabled oil prices to recover from a dive below $72 a barrel at the beginning of the week.
Moving into the long holiday weekend, it looked like the main effect of Hurricane Earl would be to dampen demand for gasoline as motorists shunned the rain and wind brought by the storm. Labor Day traditionally marks the end of the driving season and comes this year with unusually high inventories of both oil and gasoline.
Analysts surveyed by Bloomberg said that refineries closing for seasonal maintenance in September and October could further dampen demand for oil and weigh on prices starting next week.