SINGAPORE: Brent crude steadied above $118 a barrel on Thursday, reflecting caution among investors ahead of a key US employment report after dismal data from the United States to Europe renewed doubts about the state of the global economy.
Oil slid the most in two weeks on Wednesday as investors sold off commodities and equities after data showed hiring by US private firms in April was the slowest since September, new orders for US factory goods suffered the steepest drop in three years and the euro zone's manufacturing sector index marked its lowest reading since June 2009.
"Risk markets are overall very cautious ahead of this nonfarm payroll data, that's why we're seeing reduced volumes and a few bets being taken off the table," said Ben Le Brun, market analyst at OptionsXpress in Sydney.
The US nonfarm payroll data for April is due out on Friday.
Brent crude for June delivery edged up 11 cents to $118.31 per barrel by 0219 GMT, after falling more than 1 percent in the prior session.
US oil eased 12 cents to $105.10 after dropping nearly 1 percent on Wednesday. Brent and US crude's percentage losses in the previous session were the biggest since mid-April.
US businesses outside the farm sector are expected to have added 170,000 jobs last month, according to a Reuters survey, after rising a meager 120,000 in March.
Disappointment over the March number, which was less than half the average monthly increase in the prior three months, pointed to sputtering growth in the world's top economy, fueling a sell-off in risky assets last month.
"If the figure is significantly weaker on Friday then it starts to raise concerns about some moderation in what, at this stage, is still only a fairly modest rate of employment growth in the US," said Ric Spooner, chief market analyst at CMC Markets.
"It would not be taken well by risk markets."
Recent US data, including softer labor market figures, have raised fears that the economy may have lost some strength as the second quarter got underway, denting the outlook for demand from the world's No. 1 oil consumer.
Underscoring slow demand, US crude inventories soared to their highest level in more than 20 years after rising for the sixth straight week last week.
US crude oil stocks rose 2.84 million barrels last week to 375.86 million barrels, more than forecast, and hitting the highest level since September 1990.
Domestic crude stocks have ballooned more than 29 million barrels since late March, the biggest six-week increase since February 2009, data from the US Energy Information Administration showed.
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