Oil prices extend week-long slump

7th May 2010, Comments 0 comments

Oil prices fell further on Friday as the dollar hovered around 14-month highs against the euro following positive US jobs data.

New York's main contract, light sweet crude for June delivery shed 1.40 dollars to 75.71 dollars a barrel.

Brent North Sea crude for June delivery slid 1.10 dollars to 78.73 dollars a barrel.

"The whole commodity complex is primarily driven (currently) by currency market volatility more than anything else," said VTB Capital analyst Andrey Kryuchenkov.

Oil prices have fallen sharply since late Monday as the dollar struck 14-month highs against the euro on worries about the stability of the eurozone amid the Greek debt crisis.

A stronger greenback makes dollar-denominated oil more expensive for holders of rival currencies, such as the euro, denting demand for energy.

The dollar was bolstered on Friday as official data showed Americans were flooding back into the job market. The Labor Department reported that a sizeable 290,000 jobs were created in April.

While the new jobs figures beat all estimates, the number of Americans returning to the job search pushed the unemployment rate up to 9.9 percent, from 9.7 percent in March.

Crude futures have also been weighed down this week by a stunning sell-off on US financial markets and news of rising oil inventories in the United States, indicating weakening demand in the world's largest energy consuming nation.

Oil prices began the week strongly -- reaching a 19-month high of 87.15 dollars on concerns about a slick in the Gulf of Mexico and positive US economic indicators.

However worries that the Greek debt crisis may spread to other vulnerable eurozone economies and affect the global economy was dampening investor sentiment, analysts said.

"Concerns about the fiscal position of a number of European countries, and possible contagion effects, continue to fuel concerns about the international economic outlook," said analysts from the Commonwealth Bank of Australia.

"Oil markets have become less confident about the international economic outlook," they wrote in a commentary.

Meanwhile in the Gulf of Mexico on Friday, crews lowered a dome over the oil leak in a bid to contain the sea of crude moving perilously closer to the US coast.

The unprecedented operation is seen as the best hope in staving off the biggest US environmental disaster since the 1989 Exxon Valdez spill in Alaska.

The containment chamber is designed to cap oil discharge from the Deepwater Horizon oil rig operated by British energy giant BP that exploded on April 20, triggering the massive oil spill and killing 11 workers.

Since the explosion, nearly three million gallons of crude have spewed into the sea from a well below the rig.


© 2010 AFP

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