BUSINESS

Oil dip to US$105 on reports of slower eurozone manufacturing, US jobs report

05/02/2012 08:53 EDT | Updated 07/02/2012 05:12 EDT
NEW YORK, N.Y. - Oil prices fell Wednesday on concerns about a weakening European economy and disappointing job growth in the United States.

Benchmark West Texas Intermediate crude gave up 94 cents to end the day at US$105.22 a barrel in New York. Brent crude, which helps set the price of crude imported by the United States, lost $1.46 to finish at US$118.20 a barrel in London.

Prices dropped after a survey showed that Europe's manufacturing industry is slowing down. Also, the unemployment rate in the 17 countries that use the euro rose to 10.9 per cent in March.

A separate report said U.S. businesses added just 119,000 jobs in April, far lower than the 201,000 added in March.

Oil and natural gas demand has been declining this year in the United States and Europe, and it could fall further if their economies struggle. The U.S. is the world's largest oil consumer, while Europe uses nearly a fifth of the world's oil.

Wednesday's reports out of Europe and the U.S. show "the economic picture remains uncertain," said Gene McGillian, a broker and oil analyst at Tradition Energy. "The European debt crisis is still ongoing, and while the U.S. appears to be improving, it's really just muddling forward," he said.

The Energy Department's Energy Information Administration also reported on Wednesday that U.S. oil supplies grew slightly more than expected last week, while demand fell nearly two per cent. American crude inventories increased by 2.8 million barrels from the previous week, to 375.9 million barrels in storage. At the same time, gasoline supplies dropped by two million barrels.

The EIA report said wholesale demand for gasoline was down almost five per cent from a year ago, as many motorists continue to be careful about how much they drive.

In other energy futures trading, natural gas fell nearly five per cent after jumping on Tuesday to the highest level in two months. Futures fell 11.8 cents to finish at US$2.253 per 1,000 cubic feet.

Heating oil fell by 3.46 cents to end at US$3.1425 a U.S. gallon (3.79 litres) and gasoline fell by 2.14 cents to end at US$3.0757 a gallon.

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