Crude oil plunges more than 4% on U.S. data, growth fears

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Forexpros - Crude oil futures extended sharp losses on Thursday, dropping to a one-week low after official data showed that U.S. first time jobless claims rose more-than-expected last week, adding to ongoing fears over the global economic outlook.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD83.94 a barrel during U.S. morning trade, plunging 4.2%.

It earlier fell as much as 4.4% to trade at USD83.75 a barrel, the lowest since August 11.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending August 12 rose by 9,000 to a seasonally adjusted 408,000, higher than the expected increase of 400,000.

The previous week's figure was revised up to 399,000 from 395,000.

Oil traders have been paying close attention to readings on U.S. employment levels for signs that people are returning to work, thus driving more and using more energy.

A separate report showed that the U.S. core consumer price inflation rose 0.2% in July, in line with market expectations, while consumer prices including food and energy costs rose 0.5% last month, above expectations for a 0.2% increase.

The higher-than-expected inflation reading dampened expectations the Federal Reserve would embark on a third round of quantitative easing.

Concerns over the global economic outlook were exacerbated after Wall Street investment bank Morgan Stanley cut its outlook for global economic growth for 2012, citing an "insufficient policy response to Europe's sovereign debt crisis, weakened confidence and the prospect of fiscal tightening".

The investment bank added that the U.S. and Europe are "dangerously close to recession."

A broadly stronger U.S. dollar also pressured prices, as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.72% to hit 74.34.

Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery tumbled 2.45% to trade at USD107.97 a barrel, up USD24.03 on its U.S. counterpart.

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

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

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