Singapore: Oil extended gains in Asia Monday as a decline in US drilling pointed to a slowdown in production, but concerns over demand remain after a disappointing US jobs report.
A report from Baker Hughes Inc. said the number of active rigs in the United States fell by 26 to 614 last week, the lowest in five years, helping ease concerns over the global crude oversupply that has depressed prices.
But poor unemployment data from the US continued to weigh on the market.
The US Labor Department said Friday that jobs growth in the world´s biggest economy and top oil consumer faltered in September and the labour market weakened across the board.
This has stoked concerns about demand for the commodity at a time when the Chinese economy is also slowing down amid a crude supply glut, analysts said.
The US economy added a disappointing 142,000 jobs during the month, well below analyst estimates of 205,000 and the August jobs level of 173,000 was revised sharply lower to 136,000, surprising analysts.
The July number also was lowered, bringing the average for the past three months to 167,000 jobs, lagging behind the 200,000-plus growth trend seen earlier in the year and in 2014.
The unemployment rate, measuring those without work but actively seeking jobs, was unchanged as expected at 5.1 percent, the lowest level since 2008.
The jobs data suggested that the US economy was being affected by the China-driven global slowdown and market volatility.
In morning Asia trade, US benchmark West Texas Intermediate for November delivery was up 11 cents to $45.65 and Brent crude for November jumped 15 cents to $48.28 a barrel.
Both contracts also rose on Friday after a decline in US oil drilling bolstered hopes of lower production to ease the global oversupply.
“The disappointing US jobs report for September will clearly do little to improve investor confidence in the global economy,” research house Capital Economics said.
“Yes, it will probably delay the first interest rate hike from the Fed until early next year.”
Analysts had predicted the Federal Reserve would raise interest rates either this month or in December after policymakers held back during a meeting in September.
The Fed has said the timing of a rate increase will depend on the health of the US economy.