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NEW YORK: Oil prices leapt above 106 dollars in New York Friday as
investor sentiment was driven by the weak US dollar, tight energy
supplies and more bad news on the US economy.
New York’s main oil contract, light sweet
crude for delivery in May, jumped 2.40 dollars to close at 106.23
dollars per barrel.
London’s Brent North Sea crude for May
rallied 2.38 dollars to 104.90 dollars at the settlement.
“Crude futures were higher as the dollar
weakened,” said Sucden analyst Nimit Khamar in London. The weak US
currency tends to encourage demand for dollar-priced crude because
it becomes cheaper for foreign buyers.
The greenback sank further against the euro on
Friday after news that US employers cut a surprisingly large 80,000
jobs in March, the biggest decline in employment in five years,
according to a government report.
The mounting job losses swelled the national
unemployment rate to 5.1 percent last month compared with 4.8
percent in February.
The March nonfarm job losses marked the sharpest
monthly decline since March 2003 and the start of the Iraq war,
while the unemployment rate leapt to its highest level since
September 2005.
Friday’s jobs report prompted many commodity
fund investors to bet on fresh falls for the dollar, traders said.
“Commodity funds are in many ways ahead of the
dollar,” said Alaron Trading analyst Phil Flynn.
“The bad jobs number is basically reinforcing
the idea that the (US) interest rates will come down.”
He added that “bad economic news is good for
commodities” in the near term.
Mike Fitzpatrick at MF Global said that despite
the speculative push, the trend should be lower for oil futures
since slower economic growth will mean softer demand.
“Uncertainty over future demand has undermined
every rally recently, and if the jobs number is any measure of the
pulse of the economy, it certainly has to be disappointing relative
to energy demand growth, particularly when coupled with the jump in
crude oil stocks recently,” he said.
Many traders are concerned that slowing US
growth could prompt a slowdown in demand because the United States
is the world’s biggest consumer of energy.
-- AFP
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