Oil remains high and steady on U.S. data and Sudan oil threat

WTI crude and Brent oil were slightly down on Monday, but still near two-week highs as U.S. labor figures published by the Bureau of Labor Statistics on Friday offset disappointing China data during the weekend. The U.S. economy has created more jobs than expected, although the unemployment rate also rose by 0.1%. Change in Non-Farm Payrolls indicator rose to 175 000, 12 000 more than projected and well above the preceding months revised reading of 149 000. The report showed the U.S. economy is still not strong enough to a Quantitative Easing scale down, but according to many economists by September it could reach the health level required.

Alan Greenspan, a former Fed chairman, said last week on CNBC Television that Fed needs to begin scaling back Quantitative Easing program and move toward stopping the purchases altogether.

On the New York Mercantile Exchange, WTI Crude for July delivery stood at $95.88 a barrel at 7:31 GMT, down 0.16% on the day after trading above $96 earlier in the session. Brent oil August futures marked a 0.15% decline for the day and traded at $104.22 a barrel at 7:34 GMT. The European benchmark ranged between session high of $104.59 and $104.17 low.

Takashi Hayashida, chief executive officer of Elements Capital Inc. in Tokyo said for Bloomberg: “People are now expecting better growth by either the end of June or beginning of July. There was short-term buying after the U.S. unemployment number came out, but this upward trend should continue. Sudan has been priced into the oil market for quite some time.”

Oil prices found support in concerns about Sudan blocking oil exports from South Sudan, which is a significant source of crude for China and other Asian nations. The reason lies within belief that South Sudan, which seceded from Sudan in July 2011, is backing rebels who oppose the rule of Umar al-Bashir, the Sudanese President. Sudan edged back on Sunday, saying the country will withdraw its decision if its neighbor stops supporting the rebels.

Negative Chinese economic data that was published during the weekend put downward pressure on oil prices, but couldnt offset the influence of U.S. labor figures from Friday and Sudans conflict. After Chinese officials revealed information last week on manipulators who used currency conversions to boost export data, much lower figures were expected than forecast earlier. Chinese exports jumped by only 1% in May and shipments to the U.S. and European Union, the Asian nation’s two biggest export targets, declined for a third straight month. China’s imports were projected to gain 6% but official figures strayed well below and showed a 0.3% decrease, marking a ten-month low.

Consumer inflation shrank to 2.1%, mismatching a 2.9% forecast and Producer Price Index (PPI) tumbled 2.9%, above expectations of a 2.5% decrease. The M2 money supply jumped 15.8%, missing 15.9% expectation. Retail Sales met projections of a 12.9% gain and so did Industrial Production with a 9.2% increase on an annual basis.