MOSCOW (MRC) -- Crude oil futures extended a decline in mid-morning trade in Asia Sept. 6 after a weaker-than-expected US employment report heightened near-term demand concerns, reported S&P Global.
At 10:49 am Singapore time (0249 GMT), the ICE November Brent futures contract was down 99 cents (1.36%) from the previous close at USD71.62/b, while the NYMEX October light sweet crude contract was down 91 cents (1.31%) at USD68.38/b.
Both markers fell after US Department of Labor data released late Sept. 3 showed nonfarm payrolls rose by 235,000 jobs in August, down sharply from the 1.05 million increase reported in July and well below market expectations of a rise of more than 700,000.
"I think sentiments are largely following through from the US August jobs report, which underperformed expectations by a wide margin," IG market strategist Yeap Jun Rong told S&P Global Platts Sept. 6. "This highlights that COVID-19 is having a larger near-term impact on recovery than many expected."
ANZ Research analysts in a note said the deceleration in US hiring raised concerns that the delta variant was having an impact on the US economy that would ultimately impact demand.
Meanwhile, producers in the Gulf of Mexico were continuing to aim to bring production capacities back online in the wake of Hurricane Ida. While operations mostly escaped major damage from the storm, there has been minimal recovery in Gulf of Mexico oil output to date, analysts said Sept. 6.
The US Bureau of Safety and Environmental Enforcement reported 82.72% of Gulf of Mexico crude output remained offline Sept. 3, down from 85.89% reported Sept. 5.
With 1.7 million b/d of offshore production yet to come back onstream and most of Louisiana's refining industry debilitated by flooding, US crude and product stockpiles were expected to fall, they added.
As reported earlier, Shell said it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said it is not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.
As MRC wrote previously, in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.