NEW YORK: Oil prices fell more than 3 percent, with Brent crude dropping below $100 a barrel to a near 16-month low as weak US jobs data, poor Chinese manufacturing figures and the euro zone’s debt crisis prompted a cross-market selloff.
US job growth stumbled in May and the unemployment rate rose for the first time in 11 months, data from the US Labor Department showed, with nonfarm payrolls up only 69,000 jobs last month, the fewest additions in a year.
US manufacturing slowed in May, though a gauge of new orders rose to its highest in over a year, according to the
Institute for Supply Management.
The US data came after reports showing China’s official Purchasing Managers’ Index eased to its weakest reading this year and Germany’s manufacturing sector contracted at the fastest pace in almost three years.
Gold bucked the trend and rallied, while industrial feedstock copper fell to a 2012 low. The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, lost 1.46 percent after tumbling nearly 11 percent in May, the second-largest monthly decline since 2008.
US equities slumped, with the Dow Industrials turning negative for the year. “We’ve had constant worries about Greece, Spain, the euro, poor data from the US, and overnight the Chinese data was not positive,” said Tony Machacek, an oil futures broker at Jefferies Bache.
Brent July crude fell $3.50 to $98.37 a barrel by 11:13 a.m. EDT (1513 GMT), having pushed below $100 for the first time since October. Brent’s intraday low of $97.70 was the weakest since Feb. 8, 2011.
US July crude was down $3.45 at $83.08 a barrel, having fallen to $82.56, the lowest since October.
“From China to Europe to the US, all the data have shown real slowing,” said John Kilduff, partner at Again Capital in
New York.
Brent oil prices had already slumped by 15 percent during May, while WTI collapsed by almost 18 percent, as concerns mounted over the state of the faltering world economy.
“Oil prices have dipped below the psychological $100-per-barrel with the focus turning away from the Iran situation and onto the state of the global economy after a raft of poor economic results over recent days,” said Gary Hornby, an analyst at energy consultants Inenco.
“Concerns over Spain have resurfaced after the country’s 10-year bond yields nudged close to 7.0 percent, a level seen as unsustainable and continuing uncertainty over the upcoming Greek elections in mid-June.”
The euro slid to $1.2288, a low point last seen on July 1, 2010, as investors sought safety in the dollar amid eurozone woes, dealers said.
“June began where May left off,” said analyst David Morrison at trading group GFT Markets.
“Investors continued to rush out of the euro and into the relative safety of the US dollar. This has put downside pressure on all dollar-denominated commodity markets, although gold and silver are now surging.”
The stronger greenback makes dollar-priced crude more costly for eurozone countries, denting demand and helping push prices lower.
