Oil plunges below $65 on fears recovery may lag
SINGAPORE — Oil prices plunged below $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 $2.50 to $64.23 a barrel by late afternoon Singapore time, after earlier dropping as low as $64.19, 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 10-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 5.68 cents to $1.73 a gallon and heating oil slid 5.23 cents to $1.65. Natural gas for August delivery plummeted 10.5 cents to $3.51 per 1,000 cubic feet.
In London, Brent prices dropped $1.51 to $64.10 a barrel on the ICE Futures exchange.
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