Crude Falls Despite Drop in Inventory, Jobs Report Looms

WTI Crude oil prices moved lower intraday on Wednesday after the release of EIA inventory data. The report showed a surprise 2.36 million barrel drop in inventory. Analysts were calling for a drop of only 500 thousand. Crude traders were somewhat prepared for the inventory decline after API data yesterday showed stockpiles fell by 2.217 million barrels.

While inventory drops are normally bullish, crude traded lower on a slightly weaker than expected ADP report which showed private employment gains of 118 thousand compared to 125 thousand expected. The ADP is a bit of a teaser in preparation for Friday’s big jobs number, which is sure to move markets.

Analysts are expecting a government reading on non-farm payrolls to show gains of 90 thousand jobs. This is weaker than last month’s 171 thousand gain, in part because of the lingering effects related to Hurricane Sandy.

So far this week, oil backed instruments like United States Oil ETF (NYSE: USO) and iPath S&P GSCI Crude Oil Total Return ETF (NYSE: OIL) experienced choppy action, declining slightly.

Ongoing concerns about the fiscal cliff are keeping a large number of investors sidelined.

United States Oil ETF (NYSE: USO) is lower by 0.60 percent in mid-day trading.

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