Global oil prices slid further on Friday, with Brent on track for the first weekly close below $70 a barrel since 2010, as strong U.S. employment data did little to lift the oil market’s bearish mood a day after Saudi Arabia cut official selling prices.
Brent and U.S. crude both remained near five-year lows as the market grappled with oversupply due to the U.S. shale boom and the recent decision by the Organization of Petroleum Exporting Countries not to cut production.
Prices pared early losses after stronger-than-expected U.S. employment data. November nonfarm payrolls notched their largest increase since Jan 2012, jumping to 321,000 compared with October figures of 243,000. Still, the market remained lackluster and subdued, traders said.
“We just had the best economic news come out for some time and the market went nowhere,” said Carl Larry, director of business development consultant for oil and gas at Frost & Sullivan. “Traders, hedge funds, oil companies – they’re saying that we might as well take some money off the table. Volumes are thin and choppy. Everyone is waiting for the weekend.”
Analysts said the Saudi cuts to monthly prices for crude it sells to the United States and Asia just a week after blocking cuts to OPEC’s output show it is stepping up its battle for market share.
“It’s been weighing on the market, showing that OPEC is not ready to end its price war,” said Commerzbank analyst Eugen Weinberg. “The lower the better seems to be the new paradigm for OPEC.”
The January Brent crude contract fell by 87 cents to $68.77 a barrel by 11:37 a.m. EST (1637 GMT). U.S. crude was down $1.12 at $65.69. Both were on track for their ninth loss in 10 weeks.
The dollar index hit a new intraday high of 89.467, the highest level since March 2009. A stronger dollar makes commodities denominated in the greenback less affordable to holders of other currencies.
U.S. employment data contrasts with the euro zone, where Germany’s Bundesbank this week halved its 2015 growth forecasts for Europe’s largest economy to 1 percent.
Oversupply could rise next year when Iraq starts to export more oil because of an agreement between Baghdad and the Kurdish regional government.
The supply of North Sea crude that underpins the Brent benchmark will average 871,000 barrels per day (bpd) in January, according to loading programs provided by trade sources.