Oil hovered below $43 today after tumbling 12 per cent overnight, its largest percentage drop in seven years, as a US government report showed crude stocks rose much more than expected in the world's top energy consumer.
The market will be eyeing weekly US jobless claims due later in the day, and December non-farm payroll and unemployment data tomorrow, which are likely to be dismal, for further clues on future demand.
US crude for February delivery was up 14 cents at $42.77 a barrel by 2.30am, after sinking 12.3 percent to $42.63 overnight, the biggest single-day percentage loss since September 24th, 2001.
London Brent crude was up 8 cents at $45.94.
"Oil prices are likely to remain choppy, and in the near term, the next potential trip-wire is US non-farm payrolls data tomorrow, which is likely to add to concerns over the US economic outlook," said David Moore, a commodity strategist with the Commonwealth Bank of Australia.
Overnight data from the US Energy Information Administration (EIA) showed that crude stocks swelled by 6.7 million barrels, more than seven times the 900,000-barrel increase analysts had expected.
Adding to the gloomy outlook, a bearish reading on private sector payrolls from ADP Employer Services on Wednesday signalled more weakness in the more comprehensive employment data report from the US Labor Department due on tomorrow.
The ADP data showed that private employers shed 693,000 jobs in December, up from 476,000 jobs in the prior month and far more than economists estimated.
The Labor Department will also release weekly first-time claims for jobless benefits later today.
"By and large, (Wednesday's) data reinforced our opinion that the weak global oil demand argument is still very much alive and well and capable of forcing crude values back to the low- to mid-$30 region," Jim Ritterbusch, president of Ritterbusch & Associates, wrote in a commentary.
Oil has fallen more than $100 from a record peak of over $147 a barrel in July, as the global economic downturn hits demand for fuel. It settled at $33.87 a barrel on December 19th, the lowest level since February 10th, 2004.
Reuters