Oil drops below $100 as Norway strike nears end

Oil drops below $100 as Norway strike nears end

Oil loses more than $1; Oslo could put an end to oil strike; Demand worries take centre stage after central bank moves

July 6, 2012 2:01 by Reuters

Oil fell below $100 a barrel on Friday on expectations the Norwegian government would end an oil workers’ strike and as enthusiasm over central bank rate cuts waned.

Norway’s government could wade into a dispute between offshore oil workers and employers over pensions as early as Friday to force an end to a strike that has oil markets on edge.

The strike, which began on June 24, has already slowed crude exports and cut Norway’s oil production by around 13 percent and its gas output by around 4 percent.

Brent dropped $1.03 to $99.67 by 0907 GMT. U.S. crude shed $1.18 to $86.04.

“Brent is supported by the escalation of the labour dispute in Norway, but the focus remains on demand,” said Victor Shum, a senior partner at oil consultancy Purvin & Gertz.

“China’s rate cut was a surprise and although it was meant to stimulate, it was interpreted as a sign of more trouble in the economy and it didn’t really inspire.”

Worries about supply from Norway drove Brent to a one-month peak above $102 per barrel on Thursday, but prices gave up some of their gains as the euro slid against the dollar after the European Central Bank cut rates.

Investors are now focusing on the all-important U.S. jobs data due later on Friday, which is expected to provide clues on the state of the world’s biggest economy.

Central banks in China, the euro zone and Britain eased policy on Thursday, highlighting concern over the fragility of the global economy that has muddied the demand outlook for commodities.

Next in line is the non-farm payrolls data from the U.S. due later on Friday. Employers are expected to have added 90,000 new workers to their payrolls, according to a Reuters survey. That would be tepid but still better than the 69,000 jobs created in May, which was the fewest in a year. (Additional reporting by Ramya Venugopal, Luke Pachymuthu and Jessica Jaganathan in Singapore; editing by James Jukwey)