Oil 'goes crazy' after jobs report
2011: 12:53 PM ET
NEW YORK (CNNMoney) -- Commodities tried to make a comeback Friday, after a stronger-than-expected report on the labor market sparked a rush into equities.
The U.S. economy added 244,000 jobs in April, the government said Friday. Economists surveyed by CNNMoney had predicted an increase of 185,000 jobs in April, following a 216,000 rise in March.
As stocks rallied, oil prices flip-flopped. Crude fell 3% ahead of the jobs report, then got a little boost before retreating again.
In early afternoon trading, crude for June delivery slipped 1% to $98.80 a barrel. On Thursday, crude sank nearly 9% -- the biggest one-day percentage drop in two years.
"Oil prices are going crazy," said Phil Flynn, senior market analyst at PFG Best. "We had this huge correction because people were concerned about the economy slowing down and demand weakening, and now we're rebounding from yesterday's selloff because we got a good jobs report and people are saying maybe demand will be okay."
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Flynn said oil had to take a break from the recent run-up at some point, and now that "we broke the back of the parabolic bull move," it will just take some time for prices to stabilize.
"We're going to see some volatility, but I do think we've hit the top -- I don't think we're going to see $115 a barrel for some time," he said, adding that once the near-term choppiness smoothes out, prices will likely hover between $80 and $104 a barrel.
Crude prices neared $114 a barrel last month as fears about supplies took hold following escalating violence in Libya. But as investors got 'accustomed' to those concerns, oil prices became mired in a fairly tight range...until this week.
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In the past week, oil prices have tumbled more than 10% on worries that recent disappointing economic reports may mean we are in for an economic slowdown.
Along with oil, stocks also took a big hit Thursday as investors became increasingly nervous ahead of the government's monthly jobs report.
Earlier this week, payroll processing company ADP said private sector payrolls grew by 179,000 in April, after an upwardly revised 207,000 increase in March. Economists were expecting a gain of 200,000 private sector jobs.
The ADP jobs report typically sets the tone for the government's monthly jobs data. Meanwhile, on Thursday, a report showed jobless claims surged to the highest level in eight months.
The dollar gained nearly 2% on Thursday after the European Central Bank left interest rates unchanged -- putting additional pressure on oil prices. Because crude prices are priced in dollars, a stronger U.S. currency tends to pressures commodities.
That was the case Friday as well, with the dollar rallying 1% against the euro, which added to the commodities selling pressure.
Silver: canary in the commodity coalmine?
In other commodities, silver prices also pared some of its early losses, falling 4% Friday -- after sinking 7% before the jobs report. Silver has taken a big hit after the CME raised its margin requirements, meaning traders have to leave more on the table to buy silver futures.
Gold for June delivery ticked up $2.10, or 1%, to 1483.50, after dropping more than 2% on Thursday.
Gas prices declined on Friday, following a 44-day string of gains -- during which the price of gasoline surged 12%. The national average price for a gallon of gasoline fell one tenth of a cent to $3.984 on Friday, according to motorist group AAA.