Oil falls $2, posts worst week since Dec 2008

NEW YORK Fri May 7, 2010 4:25pm EDT

Related Video

NEW YORK (Reuters) - Oil fell $2 a barrel on Friday and posted its biggest weekly loss in almost a year and a half following the sharp sell-off on Wall Street and on worries that the euro zone's debt crisis will derail the global economic recovery.

Better-than-expected U.S. jobs data for April failed to calm fears in oil markets that the Greek's debt crisis could spread to other euro-zone countries.

U.S. crude oil futures fell for a fourth day in a row and settled down $2, or 2.6 percent, at $75.11 a barrel, after falling further to $74.51, its lowest since February 16.

Losses for the week totaled $11.04, or 12.8 percent, the worst since prices fell almost 27 percent in the week to December 19, 2008.

"The energy markets are hanging out with equities, rolling with the Greek contagion issue," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

Friday's extended move to the downside came after breaching support at the 200-day moving average, a key long-term trend signal watched by traders.

Now, chartists say the break could herald a move below $70.

London Brent crude ended down $1.56, or 2 percent, at $78.27 a barrel.

WALL STREET BLUES

Equities fell again on Friday, a day after the Dow suffered its biggest intraday point loss, as fears of a financial meltdown stemming from the debt crisis in Greece persisted. .N

The euro, meanwhile, rebounded from a 14-month low against the dollar as German lawmakers approved a rescue plan for Greece, while the dollar gained against the yen after the U.S. employment data. <USD/>

Euro zone leaders will meet later in the day in a special summit, while Germany's parliament is to vote on the 110 billion euro ($140 billion) bailout later in the day.

Governments around the world sought to calm financial markets hit by fears surrounding the Greek crisis and U.S. President Barack Obama told German Chancellor Angela Merkel by phone he backed efforts to rescue Greece.

Oil turned negative earlier after U.S. April jobs data showed that nonfarm payrolls grew at the fastest pace in four years, although the overall jobless rate remained at a high 9.9 percent, compared with 9.7 percent in March.

"The U.S. nonfarms payroll were somewhat positive but the jobless rate up to 9.9 percent perhaps turned us back down," said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York. "The dollar strengthened and we came off."

Analysts say actual oil demand so far has not recovered from last year's fall strongly enough to drive prices higher.

Fundamentals remain bearish as midweek U.S. government data showed crude and gasoline stocks in the world's largest energy consumer rose more than expected last week.

(Additional reporting by Robert Gibbons in New York; Ikuko Kurahone in London; Florence Tan in Singapore and Janet McGurty in Toronto; Editing by Lisa Shumaker)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.