Oil Advances Monday Morning

NEW YORK (DTN) -- New York Mercantile Exchange oil futures advanced Monday morning alongside other commodities and equities, as the market expects the U.S. Federal Reserve to push back its plan to raise interest rates to next year following Friday's weaker-than-expected payroll report.

However, the upside was limited by concerns over easing demand due to global economic woes. As a sign of weakening demand, Saudi Arabia on Sunday cut its official oil prices for next month's shipments to Asia, a move that suggests the kingdom is fighting to maintain its market share.

The Saudi move comes after Iran and Iraq had cut their official oil prices last week, raising concern Middle East oil producers are adding more supply to the market at a time demand is easing.

At 8 a.m. CDT, NYMEX November WTI crude futures climbed 60 cents at $46.14 barrel, while ICE November Brent crude futures were 72 cents higher at $48.85 bbl.

In products trade, the NYMEX November ULSD futures contract rose 2.19 cents to $1.5418 gallon, while NYMEX November RBOB futures climbed 3.12 cents to $1.3726 gallon.

The dollar reversed up a short while ago after falling overnight against a basket of six major rival currencies after the Bureau of Labor Statistics on Friday said a modest 142,000 jobs were added to the nation's payrolls last month. The market had expected 200,000 new jobs and also anticipated August payrolls would be revised upwards from 173,000 previously reported.

The September payroll report was very bearish however, showing August and July payrolls were revised lower by a combined 59,000, with wages and hours worked falling and the number of people looking for work dropped to the lowest level since 1977. July payroll was revised down from 245,000 to 223,000 and August figures revised from 173,000 to 136,000.

To many analysts, the payroll report signaled the era of easy money by the Fed would continue for some time because the central bank has often said its decision to raise rates would be data-dependent. Rates haven't been raised for nine years, providing liquidity oil and other commodities have come to rely on.

Oil analysts also are citing geopolitical risk for oil's advance after Russia last week joined the war in Syria despite caution by the U.S. and NATO, who have accused the Kremlin of acting to protect President Bashar al-Assad.

Turkey on Saturday scrambled two F-16 fighter jets to intercept a Russian plane that entered its airspace. Russia admitted it was an error that would not happen again. Turkey has been the most anti-Assad NATO country, and there is fear a possible accident would pit Russian forces against U.S.-led coalition forces.

Oil the supply front, the Energy Information Administration last week showed domestic crude oil and gasoline stocks increased by 4.0 million bbl and 3.3 million bbl, respectively, during the week-ended Sept. 25. Domestic crude production declined 40,000 barrels per day to 9.096 million bpd for the week, the lowest output rate since late November 2014. Baker Hughes, Inc. reported active rigs drilling for oil fell 26 to 614, the fifth weekly decline, during the week-ended Oct. 2.

George Orwel can be reached at george.orwel@telventdtn.com