World oil prices slide on strong dollar

1st September 2011, Comments 0 comments

Crude oil prices fell Thursday as the euro sank against the dollar on the back of poor eurozone manufacturing data which sparked renewed fears of a global economic slowdown.

Brent North Sea crude for delivery in October dropped 81 cents to $114.04 per barrel in London deals.

New York's main contract, West Texas Intermediate (WTI) for October shed 37 cents to $88.44 a barrel.

Eurozone manufacturing hit reverse gear in August, tumbling to a two-year low, a key survey showed on Thursday in a new signal of economic slowdown which also caused stock markets to fall.

The eurozone manufacturing purchasing managers' index compiled by London-based Markit logged 49.0 points in August, down from 50.4 in July. Any score below 50 indicates contraction.

In response, the European single currency sank to a two-week low point of $1.4263. It later pulled back to $1.4284, down from $1.4374 late in New York on Wednesday.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, and therefore tends to hit crude demand and prices.

"The US dollar added strength early Thursday, especially against the euro trading to $1.4263," said Sucden analyst Brenda Sullivan.

"European currencies saw sentiment dampened by disappointments in their PMI data, most seeing slight declines in activity and even Germany slipping closer to the 50-mark of growth/contraction, registering 50.9."

The data release has prompted fresh fears of another sharp global downturn on the eve of a crucial jobs report in the United States, which is the world's biggest crude consuming nation.

"Against this morning's background of a more fragile economy as reported in data releases, oil markets face this afternoon's US jobless claims and more importantly tomorrow's nonfarm payrolls report," added Sullivan.

Crude futures had risen in earlier Asian trade on the back of positive Chinese and Australian data, analysts said.

Data earlier Thursday showed China's official Purchasing Managers' Index jumped to 50.9 in August from 50.7 the previous month, which was the lowest in more than two years. China is the world's largest consumer of energy.

Those figures came as Australia released figures showing retail sales rose a better than expected 0.5 percent in July from the previous month. The rise followed a 0.1 percent month on month fall in June.


© 2011 AFP

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