LONDON: Crude oil prices slumped close to $40 a barrel in trading on Friday as the United States lost a stunning half a million jobs in November, raising prospects of a steep drop in energy demand.
In London, Brent North Sea crude hit $40.72 a barrel, the lowest level since the start of 2005. Light sweet crude for January slid to $42.00 in New York, also a near four-year low.
Later on London s InterContinental Exchange (ICE), Brent North Sea crude for delivery in January recovered to stand at $41.47, down 81 cents from Thursday s close.
Light sweet crude for January was down $1.38 at $42.29 a barrel on the New York Mercantile Exchange (NYMEX).
The 533,000 decline in US non-farm payroll employment in November, together with the massive downward revisions to payrolls in the previous two months as well, is far worse than we could ever have imagined, said Capital Economics analyst Paul Ashworth.
Oil prices have plunged by more than two thirds since reaching record high points above $147 in July, pulled down by a widening global economic slowdown that weighs on demand.
It is way, way premature to think that the market has hit bottom, said David Moore, a commodities strategist with the Commonwealth Bank of Australia.
The focus is well and truly on the weakness in consumption, and that doesn t seem likely to go away in the next 24 hours.
The International Energy Agency lowered its projections for global oil demand in 2008-2013 on Friday, foreseeing annual growth of 1.2 percent rather than 1.6 percent in the face of a worldwide economic slump.
In an announcement ahead of the US jobs data, the IEA said demand for oil products should climb from 86.2 million barrels a day in 2008 to 91.3 million in 2013, altering forecasts it had made in July.
The US economy lost 533,000 jobs in November, sending the unemployment rate to a 15-year high of 6.7 percent, the Labor Department reported Friday.
The monthly report on nonfarm payrolls, seen as one of the best indicators of economic momentum, highlighted the severe retrenchment by companies in the face of a struggling economy and tight credit.
The number of job losses was much higher than the 325,000 expected by private forecasters.
This is almost indescribably terrible, said Ian Shepherdson, chief US economist at High Frequency Economics.
In the past six months the US has lost 1.55 million jobs, almost as many as were lost in the whole 2001 recession, which included 9/11 and the two months after. The pace of job losses is accelerating alarmingly.
The US, European Union, Japan and other economies are already in recession, and investors are worried about an increasingly marked decline in oil demand among the industrialized countries, and a slowdown in emerging countries such as China. -AFP
