Oil futures pulled back following a surge that put the prices at the highest levels since early May.
Traders apparently thought that the high prices of over US$85/barrel were not justified in the wake of the continuing uncertainty about the economic situation and soaring inventories in the US, while also being cautious ahead of today’s key US jobs data.
Equities mirrored the movements in the crude price with the FTSE 100 dipping 0.9%, while futures for the Dow Jones and S&P 500 indexes in the US slid 0.2%, pointing to a lower start on Wall Street.
The Labor Department will release its closely watched non-farm payrolls data today, giving another indication of the strength of the economy. Analysts are expecting to see a reduction of 8,000 following a 54,000 decline in August.
Yesterday’s jobless claims data showed an unexpected drop of 11,000 in initial jobless claims to 445,000, the lowest in three months.
In addition to the pressure from the jitters over the US data, the US dollar rebounded as the EUR/USR rate declined to 1.391 after nearly reaching 1.40.
A stronger US dollar makes dollar-denominated commodities such as crude oil more expensive for holders of other currencies, denting demand.
November Brent Crude declined to US$82.35/barrel, while US light, sweet crude for November delivery dropped to US$80.85/barrel.
BP (LON:BP) lost 1%, while fellow supermajor Shell (LON:RDSB) posted a small loss, as did Cairn Energy (LON:CNE) and Tullow Oil (LON:TLW).
BG Group (LON:BG) declined 1.1%.
Oil and gas engineering firm Amec (LON:AMEC) stood just above the opening level, while peer Petrofac (LON:PFC) dropped 1.1%.
Heritage Oil (LON:HOIL) led the midcaps with a 5% advance. Soco International (LON:SIA) climbed 1.5%.
Salamander Energy (LON:SMDR) tacked on less than 1%.
Dragon Oil (LON:DGO) and JKX Oil & Gas (LON:JKX) moved in the opposite direction, shedding about 1.5%.
Dana Petroleum (LON:DNX), Melrose Resources (LON:MRS) and Premier Oil (LON:PMO) were little moved.
Services companies were in decline with Wood Group (LON:WG) posting a small loss, while Wellstream Holdings (LON:WSM) lost 1.2%.
East and Central Africa oil and gas explorer Dominion Petroleum (LON:DPL) was among the top performing juniors, rising 6%.