On Thursday Brent oil posted it second-largest one-day fall on record in dollar terms. US crude oil futures plunged nearly 9 per cent to end below US$100 ($124) a barrel on Thursday, the lowest since mid-March
Oil’s fall came amid weakening U.S. macroeconomic data, including disappointing jobs numbers on Thursday, concerns over further monetary tightening in China and eurozone debt fears.
A survey by the National Federation of Small Businesses showed that hiring by small businesses almost ground to a halt in April added to the day’s bearish crop of economic data. The latest reports on the pulse of the economy came just a day before the government releases its April jobs report later on Friday.
“Today’s jobs numbers were poor, adding to the perception that the economy is moving back into a period of malaise, which would lead to a drop in energy demand,” said Phil Flynn, vice-president of research at PFGBest in Chicago. “Weak demand could previously be blamed on lousy weather. Now we’re probably seeing the impact of high prices and a weaker economy.”
Also depressing oil is the U.S. dollar, which rose more than 1% against a basket of currencies after the European Central Bank signaled it was unlikely to raise rates next month.
On the gasoline market, wholesale prices were down 22 cents a gallon Thursday.
“This could be a definite turn in the market,” which has seen oil and gasoline prices rising all year, said Lewis Adam, who helps fuel retailers cope with price volatility. “The market is collapsing on us.”
Prices could still bounce around and might be back up today in reaction to Thursday’s big drop.
The national average Thursday at the pump was $3.99, and diesel prices reached $4.17, according to AAA.
Before the slump Brent crude had topped US$127 a barrel earlier this year and West Texas had gone above US$114, due to the weak US dollar and supply concerns brought about by unrest in the Middle East.