US economic data dampens oil prices

4 Jul 2024 , 09:14 AM

Oil prices dipped in early trade on Thursday as job and business activity statistics in the United States came in weaker than expected, indicating that the world’s largest oil consumer’s economy may be cooling.

Brent crude prices declined 30 cents, or 0.34%, to $87.04 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 32 cents, or 0.38%, to $83.56, as trading was slowed by the Fourth of July holiday in the United States.

In the United States, figures released on Wednesday indicated that first-time applications for unemployment benefits surged last week, while the number of persons on the jobless rolls reached a 2-1/2-year high around the end of June.

Separately, the ADP Employment report revealed that private payrolls climbed by 150,000 jobs in June, falling short of the average estimate of 160,000 and following a gain of 157,000 in May.

In a further evidence of the economy’s loss of momentum, the ISM Non-Manufacturing index, a measure of US services sector activity, fell to a four-year low of 48.8 in June, well below the 52.5 expectation, after a steep decline in orders.

However, worse economic data may strengthen the Federal Reserve’s case for decreasing interest rates, analysts said, a move that would be beneficial to the oil markets because lower rates might boost demand.

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