Oil falls in Asian trade

Friday July 03, 2009

SINGAPORE: Oil fell further during Asian trade Friday as investors continued to fret about the state of the US economy where the jobless rate has surged to a 26-year high, analysts said.

New York's main contract, light sweet crude for August delivery, eased 38 cents to 66.35 dollars a barrel.

Brent North Sea crude for August delivery sank 57 cents to 66.08 dollars

"The US employment report was a negative for the oil price," said David Moore, a Sydney-based commodity analyst with the Commonwealth Bank of Australia.

Data released Thursday showed US job losses surged to 467,000 in June, pushing the unemployment rate to a 26-year high of 9.5 percent.

The latest report, seen as one of the best indicators of economic momentum, reversed the improvement seen last month when job losses fell to a revised 322,000.

Since the recession began in the United States in December 2007, the world's biggest economy and also the biggest energy user has lost 6.5 million jobs and the jobless rate has risen 4.6 percentage points.

"Risk aversion returned with a vengeance yesterday after a disappointing US labour market report for June," said Dariusz Kowalczyk, chief investment strategist with SJS Markets trading firm.

Oil prices are likely to remain under pressure until economic data point to a firm turnaround in US economic fortunes, which will in turn lead to stronger energy demand, analysts said.

"Beyond any help arising from equities... crude oil market fundamentals look fragile. No doubt, a rally in equities or a weaker US dollar could support higher oil prices," Merrill Lynch analysts said in a report.

"But anyway you cut it, oil demand is still extremely weak.... In sum, we believe oil prices will struggle to push higher over the next three months," they said.

A weak US unit makes dollar-priced oil cheaper for buyers using stronger foreign currencies and this usually pushes up demand and lifts crude futures prices.



(AFP)