Oil prices lower on weak US labour data

Global oil prices tumbled slide in the wake of unexpectedly high US jobless claims and concerns about a supply glut. (AFP/Charly Triballeau)

US benchmark West Texas Intermediate (WTI) for May delivery dropped $1.19 to $93.26 a barrel.

European benchmark Brent futures for May delivery dipped 77 cents to $106.34 a barrel.

The decline came after Department of Labour data showed initial claims for unemployment benefits totalled 385,000 in the week ending March 30, up 28,000 from the prior week. Analysts had expected the claims reading, an indicator of the pace of layoffs, to fall.

On Wednesday, oil prices tumbled after an official US oil inventory report showed surprisingly lofty supplies and data on private-sector hiring and the service sector came in weaker than expected. The WTI sank 2.8 per cent in the biggest day-to-day drop since November.

Tariq Zahir, managing member at Tyche Capital Advisors, said the poor labour reports have dimmed expectations for Friday's important monthly report on non-farm payrolls and unemployment.

"A lot of people are positioning themselves for tomorrow's jobs report," Zahir said.

Kyle Cooper, managing partner at IAF Energy Advisors in Houston, Texas, said the jobless claims figures were "clearly disappointing."

The oil market has also been keeping an eye on an oil spill on an ExxonMobil 95,000-barrel-a-day pipeline in Arkansas. The pipeline closure has raised concerns that already-high oil supplies will continue to mount.

One reason for the price decline "has to do with the Exxon pipeline that created a bottleneck and created the opportunity for prices to crash at the beginning of the week," said Jason Schenker of Prestige Economics, adding that Wednesday's oil inventory report had placed further downward pressure on the commodity.