Oil plunges to near $65 on fears recovery may lag
SINGAPORE: Oil prices plunged to near $65 a barrel Monday in Asia as dismal unemployment figures from the U.S. and Europe last week sparked investor concern about a nascent economic recovery.
Benchmark crude for August delivery fell $1.63 to $65.10 a barrel by midday Singapore time, after earlier dropping as low as $64.65, in electronic trading on the New York Mercantile Exchange. It last settled on Thursday at $66.73.
Trading was closed in the U.S. on Friday for the Independence Day holiday.
Oil has tumbled from an eight-month high above $73 a barrel last week after gloomy U.S. consumer confidence and jobs numbers fueled doubts about a rally that has doubled the price of crude since March.
"It's not looking too pretty in terms of economic data," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "The demand side fear is coming back into play."
A Labor Department report last week showed the U.S. economy lost a larger-than-expected 467,000 jobs in June. The unemployment rate climbed to 9.5 percent, a 26-year high. Unemployment in the 16 countries that use the euro spiked to a ten-year high in May, also at 9.5 percent.
"More and more people are becoming convinced we won't see a full-blown recovery any time soon," Moltke-Leth said. He said he expects the oil price to soon test the $60 a barrel level.
Another attack on oil operations in Nigeria helped bolster prices. Militants said on Sunday they attacked a Royal Dutch Shell oil facility in southern Nigeria, the latest sabotage in a campaign that has undermined output from Africa's largest producer.
In other Nymex trading, gasoline for August delivery fell 4.63 cents to $1.74 a gallon and heating oil slid 4.69 cents to $1.65. Natural gas for August delivery plummeted 10.1 cents to $3.51 per 1,000 cubic feet.
In London, Brent prices dropped 65 cents to $64.96 a barrel on the ICE Futures exchange.