Positive US employment data drove oil prices down


On Monday, oil prices edged down in respond to the positive US employment data released last Friday. The firm jobs growth brought concerns that the US Federal Reserve could put an early end to its quantitative stimulus programme.

On the ICE Futures exchange in London Brent crude used to price international varieties of oil fell by 76 cents to a price of $110.09 per barrel.

In electronic trading on the New York Mercantile Exchange during Asian market hours the Benchmark for April delivery edged down by32 cents to trade at to $91.63 per barrel.

Last Friday, the April contract gained 39 cents closing the session at $91.95 per barrel. Crude oil found support by the US employment data which rose by 236,000 jobs during last month. The jobless rate dropped from 7.9% to 7.7%. This US government report showed better than expected data.

The effect of the positive employment data cuts both ways. It gives good ground for growth. Yet, it is also a clue which suggests an earlier end to the Federal Reserve’s bond-buying program. And it is a well known fact that since the global financial crisis the quantitative easing is what supports the US economy.

According to market experts certain concerns will appear if the US economic data keeps its positive pace. Investors might get scared by a premature end of the easy money policy. It is likely that monetary stimulus might come to its suspension rather sooner than later. This will cause negative effect on oil prices and other dollar-priced commodities. That is why the positive data is a risk situation.

In order to propel lending and investment the Federal Reserve has been sustaining interest rates to almost record lows. Though, it also pulled money into stocks and commodities by drawing out of bonds.

The greenback recently gained more momentum against the euro and the Japanese yen. That place additional pressure on crude oil prices. Market players holding non-dollar currencies find oil a less appealing investment when the US money is stronger.


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