Friday Round Up: U.S. Jobless Claims Rise Unexpectedly; Oil tumbles again as traders assess Ukraine, Iran crisis;

by Knowledge Resources |

U.S. unemployment insurance claims rise unexpectedly

Unemployment insurance claims in the United States unexpectedly increased for the first time since mid-January, mostly concentrated in a few southern and midwestern states, while in most other states, the number declined.

Initial jobless claims increased by 23,000 to 248,000 in the week ended Feb. 12, according to Labor Department data released Thursday. This period is particularly scrutinized as it reflects the reference week for the February jobs report, which is due early next month.

Unemployment insurance claims has increased since mid-January

The median estimate was 218,000 claims in a survey of economists.

The rise in claims largely reflects a surge in Missouri, Ohio and Kentucky. This could indicate instability in the data, which can be volatile week to week.

The rise is likely a temporary anomaly following three straight weeks of declines as the job market rebounds from Covid’s omicron variant. Despite the increase, the decrease in Covid-19 cases and the lifting of restrictions will likely encourage Americans to work, and employers are far more desperate to keep workers as economic activity restarts.

Ongoing state benefit claims dropped to 1.59 million in the week ended Feb. 5.

On an unadjusted basis, initial claims reached 238,482 last week.

 

Oil tumbles again as traders assess Ukraine, Iran crisis

It seems that oil prices are heading for a weekly loss as investors weighed the crisis in Ukraine and the possibility that the Iran nuclear deal could be revived.

The West Texas Intermediate (WTI) dropped below $90 a barrel, extending Thursday’s 2% pullback. The US oil benchmark is on track for its first weekly decline in 2022, ending an eight-week streak of gains.

After the US raised alerts in recent days of a possible Russian attack on Ukraine, US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov agreed to meet for talks next week. Moscow said it had no plans to attack its smaller neighbor.

Setting a date alleviates the escalation of tension. On Thursday, the US raised warnings of a possible Russian invasion of Ukraine, with warnings from President Joe Biden that the likelihood of an attack is still “very high”.

The frictions have fueled a risky tone in global financial markets. Global equities are heading for a second week of losses, hampered by the standoff between Russia and the West over Ukraine, as well as the prospect of tightening monetary policy from the Fed.

Crude remains near its highest level since 2014 in the back of a rally supported by rising demand, tight supply and declining inventories. The market price structure still points to robust demand for physical barrels, with traders willing to pay high premiums for short-term supplies.

There is growing speculation that the Iran nuclear deal could be revived, potentially paving the way for the removal of US sanctions on the country’s oil exports. 

Oil Prices

  • WTI for March delivery was down 2% to $89.92 a barrel at 7:46 am ET
  • Brent for April settlement slipped 1.7% to $91.40 a barrel

The issues surrounding the Iran nuclear deal are due to be discussed at a major transatlantic security meeting in Munich this weekend. Lifting sanctions on the Persian Gulf producer’s oil shipments would be a later phase of the deal, Reuters reported, citing a draft text and unnamed diplomats.

More Oil News

  • Crude oil rising to nearly $100 a barrel is doing little to slow demand as refiners in Asia look to increase processing rates.
  • The Texas pioneers who started the US shale revolution are resisting the temptation to pump more oil.
  • China National Offshore has closed deals worth $13 billion to boost oil and gas supplies.

Friday Schedule:

  • U.S.: US Leading Indicator Index (Jan)
  • Europe: Eurozone (Current Transactions/Dec, Construction Sector Production/Dec, Consumer Confidence/Feb); France (IPC/Jan, Unemployment Rate/Q421); United Kingdom (Retail Sales/Jan)
  • Central Banks: US Monetary Policy Forum, with Fed speakers Charles Evans, Christopher Waller and Lael Brainard; Final day of the G20 meeting for finance ministers and central bank governors; Statements by Frank Elderson and Fabio Panetta, ECB
  • Latin America: Brazil (no relevant events scheduled); Colombia (Monthly Service Survey of Bogotá/2021); Mexico (Quarterly Indicators of Tourism Activity/3Q21); Panama (Passenger Entry/2021); Chile (Transport Cost Index/Jan)