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Oil slides to near $86 ahead of key US jobs report

Associated Press Modified: June 1, 2012 at 2:31 am •  Published: May 31, 2012
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SINGAPORE (AP) — Oil prices started June where they left off in May; heading down.

Crude slid to near $86 a barrel Friday in Asia, extending a month of sharp losses as traders looked ahead to a key U.S. jobs report amid signs of weakening economic growth.

Benchmark oil for July delivery was down 21 cents to $86.32 per barrel, the lowest since October, at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.29 to settle at $86.53 in New York on Thursday.

In London, Brent crude for July delivery was down 5 cents at $101.82 per barrel on the ICE Futures exchange.

Crude plunged more than 17 percent last month as traders worried slowing growth in the U.S., Europe and China would undermine global oil demand.

On Thursday, the U.S. reported that the economy grew by 1.9 percent in the first quarter, slower than first estimated. And the number of Americans seeking unemployment benefits rose last week to a five-week high.

Investors will be closely watching non-farm payrolls data for May, which are scheduled to be released later Friday.

"This is part of a more generalized market swoon arising from macroeconomic fears," Barclays said in a report. "For the first time this year, there have been some signs of panic. Sentiment seems be pricing in a dark future."

Rising U.S. crude inventories are also weighing on oil prices. The government said Thursday that supplies grew for a 10th consecutive week and are at the highest since 1990. The Energy Information Administration report added that oil demand was flat last week in the U.S., and wholesale gasoline demand fell by 2.6 percent when compared with the same period in 2011.

In other energy trading, heating oil was up 0.7 cents at $2.71 per gallon while gasoline futures fell 0.9 cents at $2.71 per gallon. Natural gas dropped 6.6 cents at $2.36 per 1,000 cubic feet.

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