Oil slips to $60; job losses pile up
Price of crude drops for 5th day in a row after vaccine efforts slow in Europe, Asia
The price of oil on Thursday plunged by the most since September after vaccination efforts faltered in Europe and Asia, putting at risk an economic recovery and the return of oil demand on the two continents.
West Texas Intermediate, the U.S. crude benchmark, fell for the fifth-straight day, dropping to $60, more than 7 percent lower than the $65 milestone it reached this month. The crude rally ended on news that Denmark, Germany, Italy, France, Thailand and Indonesia temporarily banned the AstraZeneca coronavirus vaccine.
“The oil price is internalizing this continental panic,” said Louise Dickson, an oil markets analyst at Rystad Energy. “The relationship between vaccine developments and oil prices is more visible than ever.”
Oil’s collapse Thursday represents a major setback for Houston’s oil-dependent economy, whose fortunes rise and fall with crude markets. Nearly a third of Houston’s economy is rooted in oil and gas, according to the Greater Houston Partnership, a businessbacked economic development group.
In another sign that the oil bust is far from over, oil field services companies shed more than 10,000 jobs in February, according to federal data.
What’s worse, in addition to losing 10,048 jobs last month, the services companies lost jobs in January and December after previous federal government estimates showed them adding a total of nearly 13,000. Revised figures have the sector losing 1,747 jobs in December and 166 jobs in January, instead of gains of 4,592 and 8,421, respectively.
Most of the job losses took place in Texas and Louisiana, which lead the nation in oil and gas production, according to an analysis of revised Bureau of Labor Statistics data by the Petroleum Equipment and Services Association. The Houston-based trade group represents companies that drill and complete wells and manufacture equipment for the oil and gas industry.
The group’s revised data shows
the sector lost 12,321 jobs over the past three months, erasing gains of 11,282 jobs from September to November.
“Oil field services sector employment has stagnated as companies continued reducing costs, improving balance sheets and cash flow, and did not significantly boost production,” PESA said in its report released this month.
The oil field services sector has been among the industry’s hardest hit during the pandemic, which decimated demand for crude and petroleum products such as gasoline and jet fuel. Many oil exploration and production companies, which hire oil field services firms, stopped drilling new wells and halted production at existing wells for several months last year.
The sector lost more than 102,000 jobs, including 56,000 in Texas, because of the pandemic, according to PESA.
The sector employed 603,732 workers in February, 14.5 percent fewer than the 706,528 it had during the same month in 2020, weeks before the pandemic swept the U.S. The jobs lost in 2020 represent annual wages of about $15.4 billion, the trade group said.
As crude prices climbed to about $40 a barrel this summer and above $60 a barrel last month, most oil and gas companies restarted production on existing wells and are completing wells drilled before the pandemic. Oil field services hiring could ramp up as production rebounds, although the recovery remains threatened by the ongoing pandemic.
“Analysts believe production could increase as more people are vaccinated and demand rises,” PESA said.