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Oil prices extend losses on US jobs, eurozone debt

February 7, 2010

Oil prices extend losses on US jobs, eurozone debt jitters

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Petrols pumps at a Shell petrol station



NEW YORK – Oil prices extended losses Friday as world markets were shaken by fresh concerns over the global economic recovery stemming from debt woes in the eurozone and disappointing US jobs data.

New York’s main futures contract, light sweet crude for delivery in March, slid 1.95 dollars to 71.19 dollars after shedding about four dollars on Thursday.

London’s Brent North Sea crude for March dropped 2.54 dollars to 69.59 dollars per barrel.

Persistent anxiety over the state of public finance in the eurozone and disappointing US employment figures released Friday prompted investors to seek the safe haven US dollar.

The euro plunged to its lowest level against the dollar since late May on Friday.

A stronger US unit makes dollar-priced crude oil more expensive for buyers using weaker currencies — which in turn tends to dent demand and in turn prices.

“It looks like investors are shedding their appetite for risk again,” said Mike Fitzpatrick of MF Global, predicting prices could dip as low 67 dollars in the first quarter of 2010.

“There will have to be growing evidence of improved business activity to lift prices out of those parameters, or further price declines can be expected,” he said.

With global markets on edge from jitters in Europe, the markets digested news that the American economy lost 20,000 jobs in January.

The nonfarm payrolls data fell short of expectations for a gain of 15,000 jobs that would have been a clear sign of a turnaround in the troubled labor market and overall economy after a massive stimulus effort by the government.

The report showed the jobless rate eased to 9.7 percent from 10.0 percent in December, based on a household survey that appeared to contradict the payrolls data, but reflected in part discouraged workers leaving the labor force.

“No observer of the domestic economic scene will take much solace from today’s non-farm payrolls report, particularly the revision for November to 150,000 jobs lost from 85,000,” Fitzpatrick said.

Persistent anxiety over the state of public finance in the eurozone also gripped investors.

They were worried that debt-ridden countries such as Greece, Spain and Portugal may be unable to restore stability to their public finances after having spent heavily to combat recession.

“Bottom line: If we see renewed fears in Europe, look for surge in the dollar and for the commodity correction to continue,” said Phil Flynn of PFG Best.

Earlier in the week, oil prices had soared as equity markets put in strong performances and manufacturing data from the United States reassured nervous investors.

– AFP /ls