Crude oil prices pull back from $40 per barrel after data show a build in U.S. crude oil inventories. Weekly figures show oil on pace for one of its worst weeks of the year. File photo by Monika Graff/UPI | License Photo
NEW YORK, March 24 (UPI) -- A build in U.S. crude oil inventories, coupled with a short-term rise in unemployment, added to negative pressure building on oil prices in Thursday trading.
The U.S. Federal Reserve said last week the U.S. economy is expected to expand at a moderate pace, with labor markets gaining momentum for the year. Global economic and financial developments, however, pose risks to the health of the U.S. economy.
The U.S. Labor Department reported seasonally adjusted first-time claims for unemployment rose 6,000 for the week ending March 19 to 265,000, highlighting risks to an otherwise bright spot in the U.S. economy.
Security risks in Europe in the wake of Tuesday's terrorist attacks in Brussels added to concerns about a European economy recording a negative rate of inflation, pushing crude oil prices lower this week.
Brent crude oil slumped 2.3 percent after the release of Labor Department data to trade at $39.52 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, lost 2.7 percent to start the trading day Thursday at $38.71 per barrel. Oil prices are down nearly 5 percent from Monday for one of their worst weeks of the year.
Thursday's declines were stimulated by a report from the U.S. Energy Information Administration showing a build in domestic crude oil inventories, a sign demand was not yet taking on additional supplies despite continued weakness in the energy market.
A report from the International Monetary Fund tried to explain why lower crude oil prices aren't leading to a widespread rebound for the global economy. The IMF said slow demand is only part of the story, with increased supply adding to the negative pressure on crude oil prices, notably from the increase in output from Iran.
"In addition, the U.S. supply of shale oil initially proved surprisingly resilient in the face of lower prices," it said.
In the broader U.S. economic view, the Labor Department reported the less-volatile four-week moving average for initial claims was revised up 250 to 295,750, though the previous week's figures were revised lower.