BUSINESS

Oil prices sink amid weak read on U.S. jobs data, Chinese manufacturing

06/01/2012 10:30 EDT | Updated 08/01/2012 05:12 EDT
NEW YORK, N.Y. - Oil prices plunged as bleak reports on U.S. job growth and manufacturing heightened worries about a slowing global economy.

Benchmark oil fell $3.30 to $83.04 per barrel Friday in New York after earlier dropping to $82.56 per barrel. The slide added to a 17 per cent plunge in May.

Brent crude lost $3.49, or 3.4 per cent, to $98.32 per barrel in London, its lowest price since February 2011.

The reports on jobs and manufacturing are the latest signals that the U.S. economy is growing more slowly. At the same time, Europe is embedded in a financial crisis and China's government is working to prevent economic growth there from slowing too quickly. That's led to rising concerns that oil demand may weaken in the months ahead.

U.S. employers added 69,000 jobs in May, the government said, which is the smallest number in a year and far short of the 158,000 new jobs expected by economists. The unemployment rate rose to 8.2 per cent from 8.1 per cent in April.

Economic news from China and Europe contributed to oil's plunge Two new surveys show that manufacturing slowed in May in China, which is a huge importer of oil and other commodities. Some analysts said the surveys suggest China's economic growth will fall below 8 per cent in the second quarter which could curb the need for imports. The U.S. and China are the world's two biggest consumers of oil.

Meanwhile, unemployment across the 17 countries that use the euro remained at 11 per cent in April, which was the highest level since the single currency was introduced back in 1999, according to a new report.

Leaders in the European Union continue to search for solutions to a massive debt crisis that has forced Greece and other countries to seek bailout funding. A big moment will come later this month when Greece holds an election that could result in its departure from the euro union.

Also in the U.S., the Institute for Supply Management, a trade group of purchasing managers, says its index of manufacturing activity fell to 53.5 in May from 54.8 in April. A reading above 50 indicates expansion.