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Crude plunges on global growth worries

Published 06/01/2012, 08:29 AM
Updated 06/01/2012, 08:31 AM
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Investing.com - Crude oil futures plunged  lower on Friday as global growth worries were exasperated by weak Chinese data and a stronger greenback depressed oil prices

On the New York Mercantile Exchange, Crude oil futures for July delivery traded at USD84.19 a barrel plunging 2.77%.

Traders are anticipating the nonfarm payroll report to indicate increased hiring in the U.S. with a 150,000 worker gain, lifting the U.S. dollar thus depressing dollar denominated commodities.

China’s manufacturing Purchasing Managers index fell to 50.4 in May from 53.3 in April increasing fears of a global slowdown.

Another report indicated that unemployment in the euro zone reached 11% in April and March, the highest since the data started in 1995. 

The European Central Bank and Italy pushed Germany to relent its opposition to direct euro zone aid to struggling banks in an effort to end the crisis.

Meanwhile, yields on German two, five and 30 year bonds plunged to record lows today, as well as on 10 year treasuries and British gilts

On Thursday, the U.S. EIA said in its weekly report that U.S. crude oil inventories rose by 2.2 million barrels in the week ended May 25, above expectations for a 0.55 million barrel increase. U.S. crude supplies rose by 0.88 million barrels in the preceding week. 

Total U.S. crude oil inventories stood at 384.7 million barrels as of last week, the highest level since 1990, underscoring fears over a slowdown in oil demand from the U.S.

Total motor gasoline inventories decreased by 0.8 million barrels, in line with expectations, after falling by 3.2 million barrels in the preceding week. 

Oil prices were sharply lower before the supply data as investors cut their exposure to growth-linked assets amid mounting fears over the global economic outlook.

US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.26% to trade at USD83.39.

Elsewhere on the ICE, Brent oil for July delivery plummeted 2.89% to trade at USD98.88 a barrel, with the spread between the Brent oil and Crude oil contracts standing at USD14.09 a barrel.


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