Perth: Oil fell towards $66 a barrel on Friday as high jobless numbers across the US and Europe revived concerns about the global economic outlook and its impact on energy demand.
In the latest signal the economy of the world’s biggest energy consumer was still struggling with a deep recession, US employers cut a more-than-expected 467,000 jobs in June and the jobless rate rose to a 26-year high of 9.5%.
Euro zone unemployment also rose to 9.5%, a 10-year high.
US crude for August delivery fell 36 cents to $66.37 a barrel by 8:11am, its third straight session of losses and putting it on track for a near 4.5% decline this week - the largest since mid-February.
London Brent crude fell 47 cents to $66.18.
“Data from last night were pretty traumatic. We now see the official US unemployment rate at 9.5%, which means the real jobless rate could be much higher at 15-16%,” said Stefano Vincelli, an equities and derivatives broker at Halifax Investment Services in Sydney.
“Also, now that sentiments are getting more bearish, we’re again seeing a negative correlation between the US dollar and commodities prices.”
The dollar held onto gains made in the wake of the US jobs numbers, hovering near its highest in a week against the euro.
Asian stocks fell on Friday, with Japan’s Nikkei average opening down 1.26% and Hong Kong’s Hang Seng index down 1.9%, as the bleak jobs data cast doubt on the speed of an economic recovery.
Oil prices have doubled from a low of $32.40 a barrel in December last year and surged over 42% in the last quarter -- the largest quarterly gain since 1990 - amid a weak dollar and optimism that the global economy would rebound by as early as later this year.
But latest economic data worldwide are suggesting that a global recovery will be choppy this year, if it occurs at all. Economists have warned that surging unemployment would be one of the key threats to a sustainable recovery.
JP Morgan said in a report on Friday that it expects oil prices to correct from the recent rally to about $60 a barrel or lower, amid ongoing demand weakness.
“An economic recovery will still be the primary factor in determining oil demand growth. But we are also acutely aware that prices have been rising to ration away the prospect of supply tightness at the end of the year,” JP Morgan oil analyst Lawrence Eagles said in the research note.
NYMEX floor trading will be closed Friday for the US Independence Day holiday. Electronic trading will not be affected.