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Crude oil plunges on NFP, political uncertainty

CommoditiesMay 04, 2012 01:55PM ET
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Investing.com - Crude oil futures dropped to their lowest levels in three weeks Friday, as weaker than expected nonfarm payrolls combined with eurozone political uncertainty to continue the oil bearish sentiment.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at USD97.89 a barrel, giving back 4.56%.

Fanning the oil bearish sentiment, U.S. nonfarm payrolls advanced less-than-expected last month, official data showed on Friday.

The U.S. Department of Labor reported non-farm payrolls climbed to a seasonally adjusted 115K, from 154K in the preceding month whose figure was revised up from 120K.

Economists had expected U.S. non-farm payrolls to rise 170K last month.
Adding to the uncertainty, France and Greece will hold elections over the weekend.

French voters will decide on the final round of the countries presidential race and Greece will be voting on a new parliament.

Francois Hollande, the Socialist challenger for the French highest office, is the leading incumbent. He is calling for a re-negotiation of the budget pact with European leaders, saying it needs to place more of an emphasis on growth. He has rejected Sarkozy’s plan to increase sales taxes to fund lower payroll charges.

Meanwhile in Greece, neither of the two major political parties, New Democracy and Socialist Pasok is likely to win the majority.
On Thursday,  the U.S. Energy Information Administration said oil stockpiles increased by 2.84 million barrels to 375.9 million last week.

A separate report showed that factory orders in the U.S. declined in line with expectations in March, falling 1.5%, following a 1.1% increase the previous month.

In addition, fears over the economic outlook for the euro zone weighed on market sentiment after final euro zone manufacturing data for April slumped to a 34-month low, while the unemployment rate in the bloc climbed to a record 10.7% in March.

The euro zone data also indicated that the effects of the crisis in the region are spreading to core economies.

German manufacturing output fell at the fastest rate since July 2009, with its manufacturing PMI tumbling to 46.2, from 48.4 in March, while a separate report showed that the German unemployment rate also rose last month.

On the ICE Futures Exchange, Brent oil futures for June delivery plunged 0.88% to trade at USD115.06 a barrel, up USD13.94 from its U.S. counterpart.

Crude oil plunges on NFP, political uncertainty

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