Easing pressure on oil supplies sees price drop below $100 per barrel
NEW YORK - Slower than expected economic growth in the US services sector and below expectations rise in April employment saw oil prices slipping below $100 per barrel for the first time since February.
The sharp $5 per barrel drop in crude oil prices by midday provided a relief from concerns that crippling energy prices would slow the economy struggling to chart higher growths.
Brent crude gained 12 cents to $116.20 a barrel by 0216 GMT, after racking up a 3 per cent loss in two straight sessions, its biggest two-day percentage loss since Feb 28.
Benchmark West Texas Intermediate crude fell $4.83 to $97.70, a drop of 4.7 per cent in afternoon trading Friday.
Oil prices have been falling since Wednesday but the catalyst for Friday's fall seems to be the US Labour Department data that just 115,000 jobs were added in April far fewer than in the previous three months.
Government data also shows that consumer spending particularly oil consumption dropped 5.3 per cent in the first quarter
Earlier this year, world oil demand looked to be rising quickly even as world supplies were threatened by a host of small production outages and the prospect of Iran's supplies being squeezed as developed world threatened further sanctions against its nuclear programme, which Tehran claims is for peaceful purposes.
Resumption of talks between Iran and major powers in mid-April in Istanbul after a gap of more than a year and a second round of talks in Baghdad on May 23 has eased the escalating tension in the Middle East.
Together with worries about a slowing global economy, eurozone crisis, warmer weather and rising oil inventories in the US have combined to calm oil prices, which had till recently shown signs of scaling new highs.
The price of the U.S. benchmark oil rose to $110 while global oil prices spiked even higher to $128 per barrel.
Gasoline prices in the U.S. appeared to be on track to soar past $4 per gallon nationwide and break the 2008 record of $4.11.
Changing geopolitical and economic scenario has helped ease pressure on world oil supplies, while in the US also gasoline prices have fallen to $3.80 per gallon from a peak of $3.94 in early April.
Now they could go as low as $3.50 per gallon by July 4, according to Tom Kloza, Chief Oil Analyst at the Oil Price Information Service.
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