* Weak U.S., Europe jobs and factory data raise fears
* US jobless claims fall, but services sector weakens
* OPEC says aims to lower oil prices, not comfortable
* Iran says seeks an end to sanctions on its oil
(Recasts, updates throughout)
By Jessica Donati
LONDON, May 3 (Reuters) – Oil prices dropped on Thursday
after OPEC said it was unhappy with high prices and
disappointing economic data helped paint a gloomy outlook for
the world economy, reviving concerns about a drop in demand.
Brent crude futures dropped below their 100-day moving
average on Thursday for the first time since January, while U.S.
crude fell by $2 during the session.
Worries about the euro zone also increased after the
European Central Bank left interest rates unchanged, while its
president cautioned that the outlook for the region was subject
to downside risks.
Unemployment in the euro zone is at a record 15-year high,
according to the EU’s statistics office.
“I think Europe is flooded with crude and funds are
liquidating their positions,” said an oil trader with a European
oil major.
Brent crude was down $1.77 to $116.43 a barrel at
1552 GMT, after falling more than 1 percent in the prior
session. The contract is well below the year-high of $128.40
reached on March 1.
U.S. oil was down 2.35 cents at $102.87 a barrel,
after dropping nearly 1 percent on Wednesday.
“Everything is dependent on macroeconomic issues. Personally
I am (bearish), even with the fundamental difficulty in
identifying all the geopolitical issues like Iran,” Tony
Machacek, an oil futures broker at Jefferies Bache, said.
U.S. jobless claims data Thursday showed initial claims fell
more than expected in the latest week, restoring some confidence
in the economy after the April ADP National Employment Report
showed U.S. private firm at the slowest since September.
But the U.S. services sector came in weaker than expected
and the focus remained on important April employment data due at
1230 GMT on Friday.
Analysts have forecast a slight rise in hiring, taking
unemployment to a three-year low.
“So far, the ADP survey has set a bearish tone, therefore,
the market could have a relief rally if the data is better than
expected, or paradoxically a set of very weak data could further
convince the market of another round of QE from the Fed,” said
James Zhang, an oil analyst at South Africa’s Standard Bank in a
note.
Helping to cloud the outlook for the world economy, China’s
services sector data on Thursday showed that growth slowed last
month, with the non-Manufacturing Purchasing Managers’ Index
(PMI) retreating from March’s ten-month high.
UNHAPPY
OPEC’s secretary general told an energy conference on
Thursday the group was working hard to bring down oil prices,
and that total output was far in excess of its official target.
“We are not happy with prices at this level because there
will be destruction as far as demand is concerned,” Abdullah
al-Badri said.
The 12-member Organization of the Petroleum Exporting
Countries is pumping 32.3 million barrels per day (bpd), he
said, citing figures given to OPEC by the member-countries.
That is 2.3 million bpd more than OPEC’s target of 30 million
bpd.
Talks between Iran and the West to avert a crisis over an
Iranian nuclear programme also helped chip away at oil prices as
worries about the dispute escalating subsided a little.
Iran on Wednesday said it would seek an end to sanctions
over its nuclear activities at talks with big powers later this
month.
However, Iran also accused France of helping Israel develop
inhumane weapons and hardened a public line that an end to
sanctions is vital to the success of the talks. It was the first
time an influential political figure explicitly said he expected
progress on the issue.
“Iran is still a factor. There is risk premium built into
forward pricing. At the end of the day, people can never really
become comfortable about these things until they see concrete
actions,” said Ric Spooner, chief market analyst at CMC Markets.
Iranian oil exports are running at between 200,000 and
300,000 barrels per day below last year’s level, the head of the
International Energy Agency said on Thursday.
Libya said a small cut in production had been forced by
protests. An Arabian Gulf Oil Company (Agoco) spokesman said oil
production had dropped by 20,000 barrels per day (bpd) due to
demonstrations preventing employees from entering their office.
(Additional reporting by Manolo Serapio Jr.; editing by Jane
Baird)
