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Saturday, 2 June 2012 00:08 - - {{hitsCtrl.values.hits}}
LONDON (Reuters): Oil prices fell more than 3 percent on Friday, with Brent crude dropping below $100 a barrel to a near 16-month low as weak U.S. jobs data, poor Chinese manufacturing figures and the euro zone's debt crisis prompted a cross-market selloff.
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.
“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.
“I think we are getting to levels where we might see a bit of stability coming back to the market,” he added.
Brent crude was down $ 2.08 to $ 99.79 by 1134 GMT after earlier hitting a session low of $ 99.37, its weakest since 4 October.
It dropped 14.7 per cent in May, the biggest monthly decline since 2008. US oil slipped $ 1.80 to $ 84.73 after losing more than 17 per cent last month, also its biggest slide since 2008.
The Chinese data comes ahead of a US employment report, which is expected to show non-farm payrolls increased 150,000 in May from 115,000 in April. Some saw scope for disappointment in the report.
“I don’t think Friday’s numbers are going to be any better. It’s been a dismal week so far, and we haven’t hit bottom,” said Jim Ritterbusch, President at Ritterbusch & Associates, who predicted the drop in Brent below $ 100.
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 US Energy Information Administration said.
