Friday July 3, 10:47 AM
Oil prices drop further
LONDON (AFP) - Oil prices fell further on Friday, but losses were less severe than a day earlier when traders had sold heavily on fresh worries about the weakness of the US economy.
In early London trade, Brent North Sea crude for delivery in August dropped 23 cents to 66.42 dollars a barrel.
New York's main contract, light sweet crude for August delivery, dipped 22 cents to 66.42 dollars per barrel.
Crude futures had sunk more than two dollars on Thursday as weak US jobs data quashed hopes of a speedy economic recovery in the United States, which is the world's top energy consumer.
"The US employment report was a negative for the oil price," said David Moore, a commodity analyst with the Commonwealth Bank of Australia.
Data released Thursday showed US job losses surged to 467,000 in June, pushing the unemployment rate to a 26-year high of 9.5 percent.
Since the recession began in the United States in December 2007, the world's biggest energy user has lost 6.5 million jobs and the jobless rate has risen 4.6 percentage points.
"Risk aversion returned with a vengeance yesterday after a disappointing US labour market report for June," said Dariusz Kowalczyk, chief investment strategist with SJS Markets trading firm.
Oil prices are likely to remain under pressure until economic data point to a firm turnaround in US fortunes, which will in turn lead to stronger energy demand, analysts said.
"Beyond any help arising from equities... crude oil market fundamentals look fragile. No doubt, a rally in equities or a weaker US dollar could support higher oil prices," Merrill Lynch (NYSE: MER - news) analysts said in a report.
"But anyway you cut it, oil demand is still extremely weak.... In sum, we believe oil prices will struggle to push higher over the next three months," they said.
A weak US unit makes dollar-priced oil cheaper for buyers using stronger foreign currencies, and this usually pushes up demand and crude futures prices.
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