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Update: Oil extends gains in Asia
[SINGAPORE] Oil extended gains in Asia on Monday as a decline in US drilling pointed to a slowdown in production, but a weak job report in the world's top economy kept a lid on gains.
Crude surged in New York after data showed the number of active rigs in the United States fell to a five-year low of 614 last week, helping ease concerns over the global oversupply that has depressed prices.
Oil continued to rally in Asia on Monday, although optimism was tempered by poor US unemployment data.
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 stoked concerns about demand for the commodity at a time when growth in China, the world's number two economy and major energy consumer, is also slowing down.
The US economy added a disappointing 142,000 jobs during the month, well below analyst estimates, and the August jobs data was revised sharply lower to 136,000, surprising analysts.
Analysts said the soft numbers could prompt the US central bank to push back its first interest rate hike in almost a decade, already delayed by China-driven turmoil in global financial markets.
In afternoon Asian trade, US benchmark West Texas Intermediate for November delivery was up 29 US cents to US$45.83 and Brent crude for November jumped 23 US cents to US$48.36 a barrel.
"Crude prices are supported by a tentative uptick in risk appetite and expectations of lower US production," Bernard Aw, market strategist at IG Markets in Singapore, told AFP.
"The soft US payroll report raised expectations that the Fed will push back its rate hike further, which means that easy monetary conditions may support global equities for longer. Falling US oil rigs suggest that we could see more US production cuts, which could ease the over-supply issue." Analysts had predicted the Federal Reserve would raise interest rates by December after policymakers held back during a meeting in September.
An interest rate rise potentially would drive up the greenback against other currencies, denting demand for dollar-denominated oil as it becomes more expensive for international buyers.