The bearishness continues to dominate oil’s trading with the start of the week, building up on Friday’s heavy losses with mounting slowdown fears after U.S. labor market stagnated in August.
Crude oil futures for October settlement continued to trend lower and currently hovering around the intraday low of $85.02 a barrel after opening at $86.44 per barrel the highest set for today.
The week started with a clear bearish sentiment with growth fears haunting the market and sending Asian equities lower. Investors reacted to the abysmal jobs report from the United States on Friday where the economy unexpected did not add any new jobs in August much weaker than expectations, fueling again fears of another recession.
Japanese stocks started Monday with heavy losses and ended lower by 1.9% at 8784.46 wiping out last week’s 1.7% advance on clear signs of economic weakness. The sluggish Chinese data also added to the weak sentiment as the HSCB Services PMI also slowed to 50.6 in August from 53.5 added more woes from crude’s second biggest consumer.
We also saw more downside pressure on oil from easing tropical storm woes, where Lee weakened from a tropical storm to a depression and moved out of the Gulf of Mexico where crews are resuming production in the western Gulf.
Stocks are under pressure and the sentiment in Europe today is also expected bearish with the sentiment still shaky and trading volatile, especially with the absence of U.S. and Canadian markets today for Labor Day.
More volatility and choppy trading will be seen for the rest of the session with the dominant sentiment clearly focused on slowing growth and jitters of another recession, especially as Europe is also suffering the weak growth and deepening debt crisis which is also weighing negatively on the sentiment and on commodities.