Oil dives $4, set for biggest 3-day rout since August


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(IBTimes) - * U.S. April non-farm jobs weaker than expected

* Brent crude crashes below 200-day moving average

* U.S. crude off 4 pct, Brent off 3 pct

* Brent posts biggest 3-day loss since August

By Matthew Robinson

NEW YORK - Oil plunged more than 3 percent on Friday, sending U.S. crude below $100 a barrel for the first time since February as an abrupt slow-down in U.S. hiring soured economic sentiment, while technical triggers intensified selling.

Brent's nearly $4-a-barrel slide took three-day losses to more than 6 percent, the deepest sell-off since August, rattling traders who had been lulled by low volatility this year.

While a downbeat U.S. jobs report weighed, traders said a combination of less definitive factors -- from confusion over margin changes to the breach of Brent's 200-day moving average -- had compounded selling, reminding some dealers of the abrupt $10 collapse in prices on May 5 last year.

"We have broken through key technical levels here after a disappointing employment report and the PMI number from Europe which suggest that the recovery is stalling and could affect energy consumption," said Gene McGillian of Tradition Energy.

This week's quickening rout has effectively erased any "Iran premium" from the market, suggesting that concerns over a darkening economic outlook were taking precedence over a further drop in exports from OPEC's second-largest producer.

Prices for international benchmark Brent have tumbled $15 from their 2012 high of $128.40 a barrel, struck on March 1. June Brent futures tumbled $3.97 to $112.11 a barrel by 11:38 a.m. (1457 GMT).

U.S. crude dropped more than 4 percent, off $4.57 at $97.97 a barrel, breaking below $100 for the first time since February, when fears of a shortage intensified as European Union and U.S. sanctions began to bite. Prices are only a tad higher than in early November, when a U.N. report on Iran's nuclear program stirred new action against Tehran.

Stock markets also fell, with Wall Street indices down 1.5 percent after data showed that U.S. employers added 115,000 workers last month far less than forecasts for 170,000.

Adding to economic worries, Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dropped to 45.9 last month from 47.7 in March, marking its lowest reading since June 2009.

A second day of deep losses ended a period of unusually calm trading this year. The Oil Volatility Index surged from a historic low earlier this week, rising 25 percent in the past two days, its biggest such gain since last August.

Amid the wave of selling, Brent dipped below 30 on the 14 day relative strength index on Friday, which is traditionally seen as a sign a commodity has been oversold.

For a 24-hour technical outlook on Brent:


FACTBOX-Iran crude buyers in Asia, Europe:[ID:nL3E8ET3KM]

Iran sanctions graphic: http://link.reuters.com/qeh85s


(Reporting by Matthew Robinson, Robert Gibbons, Erwin Seba, Joshua Schneyer, Jonathan Leff and Ed McAllister in New York; Zaida Espana in London; and Manash Goswami in Singapore; Editing by Dale Hudson and Bob Burgdorfer)

Original Source: http://www.ibtimes.com/articles/337436/20120504/oil-divesset-for-biggestday-rout-since-august.htm

For more information, go to www.ibtimes.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Commodities

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