Oil Prices Bounce Back After Sharp Losses

The current oil price moved closer to $94 per barrel, bouncing back after sharp declines in the past week that were caused by worries over high supplies and low U.S. job figures.

In early afternoon NYMEX trading, the U.S. benchmark for delivery in May was 97 cents higher at $93.67 per barrel. The contract moved 56 cents lower versus the previous trading day and was 5 percent down compared to its level during the midweek.

The crude price per barrel in the past week declined after a weak employment report stirred doubt on the U.S. economy’s strength. According to the report of the Labor Department, the 88,000 jobs added by the economy last March marked the lowest level in nine months. The low figure may indicate a weakening economy this spring.

The recent employment data is a helpful reminder that the U.S. economy’s recovery is still uneven, according to commodities analyst Caroline Bain of the Economist Intelligence Unit.

She anticipates the average price of oil for quarter two of this year to be lower than $90 per barrel due to a comfortable balance in the market, lower runs at refineries and quite modest consumption growth.

In the past week, the Energy Department of the U.S. reported that crude supplies were at their peak level in almost two decades, even as refiners started to increase gasoline output in preparation for the driving season in the summer. The current economy seems to not be growing quick enough to stir through the high inventories of the country.

There is a slight possibility for any further significant recovery since demand concerns have recovered the “upper hand” of analyst concerns after the recently released figures showing a weaker economy, according to analysts of Frankfurt’s Commerzbank.

Financial investors will likely take advantage of any increases in prices to get out while they still can.

On London’s ICE Futures Exchange, Brent was $1.34 higher to $105.46 per barrel.

In other NYMEX trading, the price of heating oil was 3.94 cents higher to $2.9492 a gallon. Wholesale gasoline moved 4.34 cents up to $2.907 a gallon. And the price of natural gas was 2 cents up to $4.145 per thousand cubic feet.

By: Chris Termeer