|Analysis||Oil dropped sharply after the non-farm payrolls failed analyst's forecasts and continued the grim scenario that started over the past few weeks. |
Non farm payrolls slipped sharply to 54,000 from the revised 232,000 while unemployment roared to 9.1% from 9.0%, providing further evidence that Fed may keep lose monetary policy till late this year.
Earlier this , US ADP employment change showed that the private sector added only 38,000 in May from the revised 177,000 in April, while initial jobless claims slipped to 422,000 in the week ended May 28 from the revised 428,000 a week before.
Other grim reports released this week showed drop in confidence, housing and manufacturing in the world's largest crude consumer.
In turn, crude prices for July contract fell to a low of $98.60 a barrel from the day's opening level of $100.86.
Now, investor's are putting an eye lid on fundamentals from major economies to see the strength of global recovery with tracking the development of European debt crisis.
On the other hand, the dollar took advantage of the bad news as investors preferred to buy it as a safe haven, boosted by the strong oversold sign depicted by the Stochastic Oscillator momentum indicator on the daily charts.
The dollar's advance pushed commodities down, where the dollar index reached a high of 74.45 after touching a low of 74.13.
Moreover, the EIA report released yesterday showed that U.S commercial crude oil inventories increased by 2.9 million barrels from the previous week. At 373.8 million barrels, U.S. crude oil inventories are above the upper limit of the average Range for this time of year. Total motor gasoline inventories increased by 2.6 million barrels last week and are in the middle limit of the average range.
By extension, finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 1.0 million barrels last week and are above the upper limit of the average range for this time of year.