Job losses prompt fall in oil prices

3 July 2009

Oil prices plunged by nearly four per cent on Thursday as new economic data put paid to any hopes of a quick recovery in world fuel demand.

US crude for August delivery settled at $66.73 (£40.68) - its lowest closing point for more than a month - after tumbling by $2.58 a barrel. London Brent crude fell $2.14 to close at $66.65 a barrel.

The losses came on the back of a US report which showed a rise in the unemployment rate as businesses cut nearly 470,000 jobs in June, signalling that the country is still deeply affected by the recession.

This prompted traders to reconsider their outlook for future fuel demand, after government data showed on Wednesday that gasoline and distillate stockpiles both rose by more than two million barrels last week.

Home heating oil customers saw prices plummet to lows of less than $33 towards the end of last year as the economic crisis took its toll on world fuel demand.

However, according a joint report by Opec and the European Union, prices could spike again in the next few years as the recent volatility in the market continues to discourage investment in new production.

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