Oil prices tumble as Europe and the U.S. shed jobs

Benchmark crude for August delivery fell $2.58, nearly 4 percent, to settle at $66.73 a barrel on the New York Mercantile Exchange.

By CHRIS KAHN
The Associated Press

7/2/2009

NEW YORK — Oil prices tumbled to their lowest level in a month Thursday following the release of woeful job numbers in Europe and the U.S.

Benchmark crude for August delivery fell $2.58, nearly 4 percent, to settle at $66.73 a barrel on the New York Mercantile Exchange.

Crude hit an eight-month high in midday trading Tuesday, but prices have fallen at the close for five straight days now.

Nymex is closed Friday for the July Fourth holiday.

On Thursday, a Labor Department report showed the economy lost a larger-than-expected 467,000 jobs in June. The unemployment rate climbed to 9.5 percent from 9.4 percent in May, underscoring concerns about the pace of economic recovery.

Since the recession began in December 2007, the economy has lost a net total of 6.5 million jobs.

That has destroyed demand for energy on numerous levels. Employees who have lost jobs or are in fear of losing jobs are driving less and buying fewer goods, many of them petroleum based. Factories also have curbed production and are using less natural gas and electricity.

U.S. stores of natural gas continue to grow as energy demand has weakened. The government reported that the nation's surplus grew more than expected last week, and it's now 21 percent above the five-year average.

The job numbers in the U.S. came on the heels of an awful employment picture in Europe.

Unemployment in the 16 countries that use the euro spiked to a ten-year high in May. The seasonally adjusted unemployment rate for the euro zone in May stood at 9.5 percent.

After rising 41 percent in the second quarter, which ended Tuesdsay, energy prices have begun to fall.

Oil prices have doubled since March, when the Fed committed $1.2 trillion dollars to prop up the banking industry. Investors poured money into commodities like oil as a hedge against inflation, and foreign traders found they had more buying power as the dollar weakened.

If there is any benefit from of an awful economy, it can be found at the pump.

Retail gas prices have been slipping since Father's Day. They lost less than a penny overnight to a new national average of $2.629 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are 10.4 cents more per gallon than a month ago. At this time last year, gasoline cost $4.09 per gallon.

In other Nymex trading, gasoline for August delivery fell 6.19 cents to $1.7971 a gallon and heating oil lost 5.85 cents to $1.7072 a gallon. Natural gas for August delivery dropped 2.9 cents to $3.766 per 1,000 cubic feet.

In London, Brent prices dropped $2.11 to $66.68 a barrel on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report..

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