Oil plunges below $64 on fears recovery may lag

Oil prices plunged nearly $3 to below $64 a barrel Monday as dismal unemployment figures from the U.S. and Europe last week sparked investor doubts about any nascent economic recovery.
JUL 06, 2009
By  D Hampton
Oil prices plunged nearly $3 to below $64 a barrel Monday as dismal unemployment figures from the U.S. and Europe last week sparked investor doubts about any nascent economic recovery. By midday in Europe, benchmark crude for August delivery fell $2.97 to $63.76 a barrel in electronic trading on the New York Mercantile Exchange. It last settled on Thursday at $66.73. Trading was closed in the U.S. on Friday for the Independence Day holiday. Oil has tumbled from an eight-month high above $73 a barrel last week after gloomy U.S. consumer confidence and jobs numbers fueled doubts about a rally that has doubled the price of crude since March. "It's not looking too pretty in terms of economic data," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "The demand side fear is coming back into play." A Labor Department report last week showed the U.S. economy lost a larger-than-expected 467,000 jobs in June. The unemployment rate climbed to 9.5 percent, a 26-year high. Unemployment in the 16 countries that use the euro spiked to a 10-year high in May, also at 9.5 percent. "More and more people are becoming convinced we won't see a full-blown recovery any time soon," Moltke-Leth said. He said he expects the oil price to soon test the $60 a barrel level. "With economic news still gloomy, oil demand sluggish, stocks plentiful and no supply side disruption in sight, we could be on the verge of a short term downward price correction," said KBC Market Services in London. The dollar's rise against other major currencies also weighed on oil prices, as investors who seek out commodities as a hedge against dollar weakness and inflation returned to the U.S. currency. The euro was trading at $1.3905, down from $1.4001 late Friday in London, while the British pound fell to US$1.6111 from $1.6341. Lending some support to prices was another attack on oil operations in Nigeria. Militants said on Sunday they attacked a Royal Dutch Shell oil facility in southern Nigeria, the latest sabotage in a campaign that has undermined output from Africa's largest producer. In other Nymex trading, gasoline for August delivery fell 5.83 cents to $1.7325 a gallon and heating oil slid 6.62 cents to $1.6354. Natural gas for August delivery plummeted 15.7 cents to $3.158 per 1,000 cubic feet. In London, Brent prices dropped $1.72 to $63.89 a barrel on the ICE Futures exchange.

Latest News

Judge OKs more than $90 million in settlement money for GWG investors
Judge OKs more than $90 million in settlement money for GWG investors

Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.

Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs
Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs

Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.

Retirement uncertainty cuts across generations: Transamerica
Retirement uncertainty cuts across generations: Transamerica

National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.

Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future
Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future

While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.

Raymond James continues recruitment run with UBS, Morgan Stanley teams
Raymond James continues recruitment run with UBS, Morgan Stanley teams

A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave