London: Oil fell to a 16-month low below $98 per barrel on Friday as weak US jobs data, poor manufacturing data from China and a spiralling euro zone debt crisis deepened worries over the prospects for global economic growth.
Brent crude oil futures tumbled to their lowest since February 2011, down $4.17 to an intra-day low of $97.70, before recovering to around $98.15 by 6:10pm. The contract lost 14.7% in May, its biggest monthly decline since 2008.
US oil slipped to a low of $82.56, down $3.97, after losing more than 17% last month, also its biggest slide since 2008.
“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.
A survey of US employers showed 69,000 jobs were created last month, the weakest in a year, the Labor Department said on Friday. The reading was lower than any forecast in a Reuters poll.
China’s official Purchasing Managers’ Index eased to 50.4 in May, the weakest reading this year. Germany’s manufacturing sector contracted at the fastest pace for almost three years, and the euro fell to a 23-month low against the dollar on worries about the Spanish banking sector.
Brent surged in March to $128 a barrel, the highest since 2008, as increased concern over the loss of Iranian oil due to tighter sanctions combined with supply hitches elsewhere.
The price rise worried both oil consuming and producing countries. Saudi Arabia, the top oil exporter, has been raising output and said repeatedly it liked oil at $100.
“We want a price around $100, that’s what we want,” Saudi Oil Minister Ali al-Naimi said on 13 May. “A $100 price is great.”
The kingdom, Opec’s biggest producer, raised output to 10.1 million barrels per day in May, according to a Reuters survey this week, its highest in decades. Overall Opec oil supply is at the highest since 2008.
Brent’s premium to US crude was at $15.13. High US inventories have been weighing on the US benchmark.
US crude inventories rose more than expected last week to hit their highest level since July 1990, the U.S. Energy Information Administration said.
