Oil hits 11-week low as US dollar gains on euro worries
NEW YORK, May 7 — Oil fell for the fourth day in a row today, dropping more than 2 per cent, as Wall Street fell in volatile trade and the dollar rose on safe haven bets.
Worries about euro zone sovereign debt continued to roil the financial and commodities markets, overshadowing better-than-expected US jobs data for April.
US crude oil futures were down US$1.96, or 2.54 per cent, at US$75.15 a barrel by 10:45 a.m. EDT (1445 GMT), having risen as high as US$78.19 earlier.
The day’s low extended to US$74.51, lowest since Feb 16 and losses in four sessions have reached nearly US$12, or 13.6 per cent.
London Brent crude fell 72 cents to US$79.11 a barrel.
“After yesterday’s wild ride across markets, there isn’t a good feel on how to react today. But generally, oil prices have been backing away from the 19-month high above US$87,” said Gene McGillian, analyst at Tradition Energy, in Stamford, Connecticut.
The euro gave up gains against the dollar as fears persisted that Greece’s debt crisis could spread to other euro zone countries.
Oil turned negative earlier after US April jobs data, showed that non-farm payrolls grew at the fastest pace in four years, although the overall jobless rate remained at a high 9.9 per cent, compared with 9.7 per cent in March.
“The US non-farms payroll were somewhat positive but the jobless rate up to 9.9 per cent perhaps turned us back down,” said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York. “The dollar strengthened and we came off.”
Oil prices have lost further ground from a 19-month high hit on Monday, following a plunge in global markets due mainly to concern over the Greek debt crisis.
“All markets are down this week on concerns over Greece and Europe. If the whole of the euro zone goes into trouble, it may somehow offset potential growth in the United States and Asia, which will be negative input to oil prices,” Oliver Jakob with Petromatrix said.
Euro zone leaders will meet later in the day in a special summit, while Germany’s parliament is to vote on the 110 billion euro (RM470 billion) bailout later in the day.
Global equity markets have also fallen this week, while market volatility index and gold have risen.
Losses on Wall Street accelerated, with major indexes falling more than 2 per cent, a day after a historic intraday plunge on worries about the Greece’s debt crisis could spread.
Analysts say actual oil demand so far has not recovered from last year’s fall strongly enough to drive prices higher.
At the same time, midweek US government data showed crude and gasoline stocks in the world’s largest energy consumer rose more than expected last week. — Reuters