More losses for crude after U.S. labor figures turn lower and the European Central Bank opts to keep rates near, or below, zero. File photo by Monika Graff/UPI | License Photo
NEW YORK, Jan. 21 (UPI) -- Weaker unemployment figures from the United States and concerns about downside risks from European Central Bank pushed oil prices lower Thursday.
The U.S. Labor Department said seasonally adjusted initial claims for unemployment for the week ending Jan. 9 rose 10,000 from the previous week to 293,000. While last week's level was revised slightly lower, the Labor Department said the four-week moving average had increased by 6,500.
Texas, the top U.S. oil producer in the United States, had the second-largest increase in unemployment, after California, with an increase of more than 17,000.
Lower crude oil prices have forced several energy companies to trim payrolls. Royal Dutch Shell this week said its eventual merger with British company BG Group would lead to around 10,000 in combined layoffs.
Brent crude oil prices continued edging lower, falling 1 percent at the open of trading in New York to $27.60 per barrel. West Texas Intermediate, the U.S. benchmark for the price of crude oil, was off 1.2 percent to $28.01 per barrel in early morning trading.
The European Central Bank announced Thursday it was keeping its key interests rates near, or in some cases below, zero. While falling oil prices are expected to lead to more disposable income for European consumers, President of the ECB Mario Draghi said inflation may be pressured by a weak energy sector.
"The economic recovery in the euro area continues to be dampened by subdued growth prospects in emerging markets, volatile financial markets, the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms," he said from Brussels.
The ECB said the regional economy grew 0.3 percent year-on-year during the third quarter. Overall recovery faces additional pressures from geopolitical risks and weakness in the global economy.
Most analysts expect crude oil prices will recover by the end of the year as cuts in capital spending eat into an excess in supply. Bob Dudley, the CEO at BP, told the BBC he expected widespread volatility in the first half of 2016, but demand should return during the latter half of the year.
"We could see a price $30 to $40 by the middle of the year and I think towards the end of the year it could be into the $50s," he said.