Oil prices slump in line with stock markets

20th May 2010, Comments 0 comments

World oil prices tumbled on Thursday, hitting eight-month lows as stock markets slumped after a surprise worsening of jobs data in the United States, the world's biggest energy consumer.

New York's main contract, light sweet crude for delivery in June, hit 67.05 dollars a barrel -- the lowest level since September.

It later stood at 67.30, down 2.57 dollars compared with Wednesday's close.

The June contract, which expires at the close, had already fallen under 68 dollars Wednesday on fears about the impact of the eurozone crisis on energy demand.

Elsewhere on Thursday, Brent North Sea crude for July sank 2.55 dollars to 71.14 dollars a barrel in late London trade.

New US unemployment claims have risen for the first time in five weeks according to a report published Thursday, fuelling concerns that a key cog of the US recovery is faltering.

The Labor Department said initial jobless claims totaled 471,000 in the week ending May 15, up 25,000 or 5.6 percent from the prior week's revised figure of 446,000.

The figure was higher than the average analyst forecast of a drop to 439,000 new claims and a hammer blow to hopes that the US job market was finally on the mend.

"The move was completely opposite of expectations," said Jeffrey Rosen, an economist with Briefing.com.

"The strengthening of the labor market is a myth, or at least that is what the latest piece of data from the Department of Labor would suggest," Rosen said.

Global stock markets, already under huge pressure from concerns over the European debt crisis, slumped on the data.

Commerzbank analyst Carsten Fritsch argued that oil under 70 dollars a barrel would probably tempt more traders to part with their cash.

"Several market players are likely to see a price below 70 dollars as a buying opportunity," said Fritsch.

Elsewhere on Thursday, energy group BP conceded that more fuel was leaking into the Gulf of Mexico than previously estimated.

A month after an explosion tore through a BP-leased drilling platform, spokesman Mark Proegler said a tube was now siphoning away 5,000 barrels -- or 210,000 gallons -- of the oil spilling from the ruptured well.

"Now that we are collecting 5,000 barrels a day, it might be a little more than that," Proegler said of the company's initial estimate of 5,000 barrels leaking into the water.


© 2010 AFP

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