AFP.FRIDAY.06/MAY/2011 :
Oil prices plunge further, WTI drops below $95.
The plunge in oil prices accelerated on Friday, mirroring a fierce sell-off across most commodities, with sentiment hit by weak US data, a stronger dollar and concerns over weak energy demand.
Thursday's sell-off had seen New York crude dive at its fastest pace in two years.
New York's main contract,
West Texas Intermediate (WTI) light sweet crude for delivery in June, slumped as low as $94.63 in London trade on Friday after losing more than eight percent to $99.80 Thursday, the first time it had fallen below $100 since March 16.
Brent North Sea crude for delivery in June tumbled by more than five dollars to hit a low point of $105.15 a barrel in London morning deals.
The WTI's fall on Thursday was its heaviest since September 29, 2008, at the beginning of the
global financial crisis, when prices plunged more than nine percent, analysts said.
"Commodities in general suffered a significant setback yesterday, as concerns over economic growth in the United States again weighed on prices," said analyst David Hart at Westhouse Securities.
"Oil prices were particularly weak, with additional declines this morning. A stronger US dollar on the day also contributed to the weakness."
New US
jobless claims rose to 474,000 in the week ending April 30, a 10 percent increase from the prior week and an eight-month high, the Labor Department reported on Thursday.
The data heightened fears that Friday's non-farm payrolls could be dire and spell fresh misery for the oil market.
Crude futures have also fallen heavily in response to downbeat Chinese economic data, and fears over the
eurozone debt crisis after the bailout of debt-wracked Portugal.
"Weaker than expected data from
China, renewed concerns about eurozone?s sovereign debt issues and disappointing US economic data had already established a negative tone across the markets," added Sucden analyst Myrto Sokou.
"The disappointing US employment figures (on Thursday) provided the trigger for further weakness in oil market that prompted investors to this heavy sell-off across oil and
base metals prices."
Many
commodity markets also fell this week as the euro tumbled against the dollar after the
European Central Bank cast doubt on the likelihood of a eurozone interest rate rise soon.
The euro fell sharply on Thursday after the ECB held rates and its president
Jean-Claude Trichet dropped his keyword "vigilant" in reference to the bank's view of inflation.
That was widely taken as a signal that the ECB was not likely to follow last month's rate increase quickly with another, which sparked an upsurge in the dollar.
A buoyant dollar tends to make dollar-priced commodities more expensive for buyers using weaker currencies. In turn, that tends to dampen demand and eventually pull prices lower.
Oil prices rebound in Asia after heavy sell-off.
Oil prices rebounded in Asia as traders snapped up bargains a day after New York's main contract suffered its biggest fall in more than two years.
New York's main contract,
West Texas Intermediate (WTI) light sweet crude for delivery in June, on Friday rose 58 cents to $100.38 a barrel after diving more than eight percent to $99.80 Thursday -- the first time it had fallen below $100 since March 16.
The WTI's fall was its heaviest since September 29, 2008, at the beginning of the
global financial crisis, when prices plunged more than nine percent, analysts said.
Brent North Sea crude for June delivery gained 92 cents to $111.72 after it slid more than $10 overnight.
Oil markets were recouping some of Thursday's losses as traders capitalised on cheap prices to buy back into the market, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
"Prices are up but this is not unusual after a massive sell-off, we are observing some market participants considering this as a buying opportunity," he told AFP.
Prices were also pushed down by a stronger dollar, which gained against the euro after
European Central Bank president
Jean-Claude Trichet suggested the lender was growing more dovish on
interest rates, Shum added.
"What triggered the selloff was really the strong US dollar versus the euro when the ECB indicated the bank would not raise interest rates in the eurozone," he said.
"That caused the US dollar to make big gains against the euro."
A stronger greenback makes dollar-priced crude more expensive to traders using other currencies.
However, Shum said he was confident that crude prices would remain supported "around the triple-digit territory."
"After all, the geopolitical issues that caused prices to rally 20 percent over the year has not changed," he said.
Oil had seen huge gains in recent months on the back of upbeat sentiment towards the state of the global economy -- with the United States posting positive data on manufacturing and jobs -- as well as uprisings in the crude-rich Middle East.
But sentiment has been hit this week after the US released a series of jobs figures that seemed to dash earlier confidence.
Phillip Futures investment analyst Ong Yi Ling told AFP: "Now that US economic growth is slowing, such high crude oil prices are not sustainable."
Ong added that traders were keenly watching the US jobs report to be released later Friday as a barometer for the state of the economy of the world's largest oil consumer.
"If there is a surprise on the downside, prices will turn
bearish," she said.
However, a bloody battle between rebels and government forces in Libya as well as an army clampdown on anti-regime protesters in Syria highlighted ongoing instability in the Middle East and North Africa.
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