Oil Lower in Friday Trade

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange traded sharply lower Friday morning on bearish economic signals coming from China and eurozone, while lower-than-expected employment gains in the United States last month widely missed expectations.

In midmorning trade, WTI April contract was down $2.06 at $54.60 barrel (bbl), and the ICE May Brent contract moved $2.10 lower at $64.20 bbl. April ULSD futures traded 6.42 cents down at $1.9485 gallon and Nymex April RBOB futures reversed from a better-than four-month high on the spot continuation chart to $1.7403, shedding 6.51 cents in value.

Friday morning, investors shifted focus to macroeconomic risks facing the global economy after a set of bearish economic data from China and Europe were released this week. The Chinese government said on Friday the country's exports tumbled 20.7% in February from a year ago, missing economists' expectations of 4.8% decline. Chinese imports in February fell 5.2% from the prior year versus expectations for 1.4% fall.

China's weaker-than-expected trade data comes a day after the European Central Bank slashed its forecast for growth in Eurozone from 1.7% to 1.1% for 2019. Europe's GDP grew at the slowest pace in five years in the fourth quarter of 2018, with weakness driven by a slowdown in Germany's manufacturing sector, technical recession in Italy and Britain's exit from the European Union. The European Central Bank (ECB) announced a policy response of market-friendly measures to prompt a sluggish economy, including keeping the key interest rate at zero through the end of the year and providing a fresh set of loans to European banks.

U.S. Bureau of Labor Statistics released payroll report Friday morning showing a sharp slowdown in total nonfarm employment to 20,000 new jobs in February was well below expectation for 180,000 new hires. The unemployment rate declined by a more-than-expected 0.2% to 3.8% in the same month according to government data. The slowdown follows an upwardly revised 311,000 jobs for January and 227,000 new jobs in December, also revised up. The data contrasted with Wednesday's private employment report from payroll provider ADP, which showed 180,000 job gains in February.

The oil market now awaits weekly U.S. rig count figures from Baker Hughes later Friday, which provide a signal on the pace of U.S. oil and gas production growth. Last week, Baker Hughes reported the number of rigs deployed in the United States dropped to a 10-month low at 843 through March 1. On Wednesday, the Energy Information Administration reported domestic crude production unchanged during the week-ended March 1 at a 12.1 million barrels per day (bpd) record high.

Liubov Georges can be reached at liubov.georges@dtn.com