June 1, 2012 / 10:13 AM / 7 years ago

UPDATE 12-Brent crude below $100, hit by weak economic data

* U.S. nonfarm payrolls data weakest in a year
    * China's official PMI falls more than expected in May
    * Brent crude drops to lowest since Feb 2011
    * Coming up: API oil data, 4:30 p.m. EDT Tuesday

 (Updates volumes, adds CFTC data, paragraphs 12, 14)	
    By Robert Gibbons	
    NEW YORK, June 1 (Reuters) - Brent crude oil prices fell for
a fourth straight day on Friday, dropping under $100 a barrel to
a 16-month low, as weak U.S. and Chinese economic data thrashed
markets and sent investors to perceived safer havens. 	
    Data showing U.S. job growth stumbled in May and the jobless
rate rose for the first time in nearly a year, added to worries
about the global economy's health. A report from No. 2 oil
consumer China, indicated a slowdown in that country's
manufacturing sector, which dragged crude down early on Friday.
    That weak data added to ongoing worries the euro zone crisis
will hurt fuel demand, to pull Brent crude down its 2012 peak of
more than $128 a barrel in early March. 	
    "The negative employment data caps the recent deterioration
in global economic data," said John Kilduff, partner at Again
Capital in New York.	
    "From China to Europe to the U.S., all the data have shown
real slowing."	
    In May, both Brent and U.S. crude posted their biggest
monthly losses since late 2008, as trader focus on the potential
disruption of Iranian oil supplies due to Western sanctions
against Tehran was countered by the wider economic concerns.	
    Friday's bearish sentiment swept across markets, with U.S.
stocks down sharply to erase most of the year's gains and the
Thomson Reuters-Jefferies CRB commodity index down 1.7
percent to the lowest level since September 2010. Gold rose more
than 3 percent on safe-haven buying and U.S. government debt
yields fell to record lows.  	
    Brent July crude tumbled $3.44 to settle at $98.43 a
barrel, the weakest close since Jan. 27, 2011, having pushed
below $100 for the first time since October. Brent's intraday
low of $97.54 was the weakest since February 2011.	
    The weekly loss of 7.86 percent was front-month Brent's
fifth straight weekly slip and it five-week slump of 17.86
percent was the biggest five-week percentage decline since the
period to June 6, 2010.	
    U.S. July crude also fell a fourth straight day,
shedding $3.30 to settle at $83.23 a barrel, the lowest
settlement since Oct. 7. The intraday low of $82.29 also was the
lowest since October.	
    Front-month U.S. crude fell 8.4 percent on the week, also a
fifth straight weekly slide. The 20.68 percent slide in five
weeks is the biggest percentage five-week drop since the week
ending Jan. 18, 2009.	
    Brent trading volumes were strong, 50 percent above the
30-day moving average, while U.S. crude futures were 33 percent
above their 30-day average.	
    Friday's drop plunged both contracts further into oversold
territory based on the 14-day relative strength index. U.S.
crude dropped to just over 16, the lowest since 1987 and well
under the 30 level that is considered a technical indication of
an oversold condition. Brent dipped to around 17, a level not
hit since 2008.	
    Money managers cut their net long U.S. crude futures and
options positions in the week to May 29, the U.S. Commodity
Futures Trading Commission on Friday. 	
    Refined product futures also tumbled. U.S. RBOB gasoline for
July delivery  slid more than 2 percent to hit an
intraday low of $2.6326 a gallon, the lowest for front-month
gasoline since December.	
    Heating oil  lost nearly 3 percent and hit a
low of $2.6085, lowest for front-month price since January 2011.	
    Further pressure came from reports illustrating a widespread
slowing in manufacturing. In addition to the Markit's Eurozone
PMI slump to its lowest since June 2009, the Markit/CIPS PMI
showed Britain's manufacturing sector shrank at its fastest pace
in three years in May. 	
    U.S. manufacturing also slowed in May, though a gauge of new
orders rose to its highest in over a year, according to an
industry report. 	
    The oil price rout on Friday continues a retreat that began
after Brent rallied above $128 a barrel in March, the highest
since 2008. That rally was due to concerns over the loss of
Iranian oil due to tighter sanctions and to other supply
    The threat to economic growth from the high prices sparked
consumer countries to consider releasing strategic reserves and
caused top exporter Saudi Arabia to raise production in an
effort to bring prices back to $100.	
    "We want a price around $100, that's what we want," Saudi
Oil Minister Ali al-Naimi said on May 13. "A $100 price is
    While the price slide is considered unlikely to prompt Saudi
Arabia to quickly cut production, especially with the European
Union's embargo on Iranian oil still slated for July, other OPEC
countries need a higher price to balance budgets.
 (Additional reporting by Gene Ramos and Matthew Robinson in New
York, Alex Lawler and Christopher Johnson in London and Luke
Pachymuthu in Singapore; Editing by Marguerita Choy, Dale
Hudson, David Gregorio, and Bob Burgdorfer)
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