WTI retreats as U.S. creates less jobs than projected

Oil prices retreated in the late European and early American session as the U.S. Department of Labor reported the U.S. economy has added less jobs in July than forecast. Brent also fell.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $106.69 a barrel at 13:54 GMT, down 1.11% on the day. Futures trader higher throughout the day, but retreated towards negative territory after rising to $108.76 a barrel earlier, the highest since February 2012. Days low was touched at $106.58 following the release of the data. Despite trimming its weekly advance to little over 1.9%, the American benchmark is still headed at closing the week higher.

Meanwhile on the ICE, Brent oil for September delivery traded at $108.62 a barrel at 13:54 GMT, down 0.84% on the day. After trading higher for most of the day, the European benchmark fell to a days low of $108.59 a barrel in late European trading after hitting a days high at $110.08, the highest since April. Brent rose 1.55% on Thursday but trimmed its weekly gain to 1.4%.

Oil halted its advance on Friday following the release of unexpectedly disappointing payrolls data. The U.S. Department of Labor said the U.S. economy created a lot less jobs than projected. Non-Farm Payrolls climbed by 162 000, underperforming analysts’ expectations for 185 000. This was also below June’s reading of 188 000 jobs created, which was revised down by 7 000 from 195 000.

Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said for Bloomberg: “The market is moving lower on the disappointing jobs number. The market has overextended to the upside this week and was set for a pullback. This is probably a temporary setback.”

The negative payrolls reading offset other overall positive U.S. data that was released on Friday. The U.S. Department of Labor reported the Unemployment Rate fell to 7.4% from 7.6% in July, the lowest level since December 2008. Economists expected the indicator to drop by 0.1% to 7.5%.

Meanwhile, Americans’ June earnings also disappointed. Average Hourly Earnings fell by 0.1%, confounding analysts’ expectations to surge by 0.2%, which would have still been below May’s 0.4% jump. At the same time, Personal Income rose by 0.3%, mismatching forecasts for a 0.4% surge and May’s downward revised reading of 0.4%. On the other hand, Personal Spending exceeded the income increase of the average American and met expectations for a 0.5% surge, compared to June’s downward revised figure of 0.2%.

Core Personal Consumption Expenditures (Core PCE) rose by 0.2%, outperforming expectations and May’s 0.1% rise. Meanwhile the indicator jumped by 1.2% compared to the same month a year earlier, followed by an upward 0.1% revision of May’s reading to 1.2%.