Brent oil prices sank under $98 on Friday for the first time in almost 16 months, hit by poor US non-farm payrolls data, the strong dollar, weak Chinese manufacturing figures and eurozone debt tensions. In afternoon London deals, Brent North Sea crude for delivery in July slumped to $97.70 per barrel -- the lowest level since February 8, 2011. New York's main contract, West Texas Intermediate crude for July dived to $82.56 a barrel, which was last seen on October 10. Crude futures, which suffered heavy losses last month on eurozone concerns, dived even lower after Friday's dismal payrolls report in the top global oil consumer the United States. The US economy added just 69,000 jobs in May, pushing the unemployment rate up to 8.2 percent, official data showed. The closely-watched US workforce figures were well below expectations of a 150,000 jobs increase and for the jobless rate to hold steady at 8.1 percent. In reaction, the euro slid to $1.2288, a low point last seen on July 1, 2010, as investors sought safety in the dollar amid eurozone woes, dealers said. "June began where May left off," said analyst David Morrison at trading group GFT Markets. "Investors continued to rush out of the euro and into the relative safety of the US dollar. This has put downside pressure on all dollar-denominated commodity markets, although gold and silver are now surging." The stronger greenback makes dollar-priced crude more costly for eurozone countries, denting demand and helping push prices lower. "This follows today's dismal non-farm payroll report which has raised expectations that the Federal Reserve will announce yet another programme of asset purchases at its meeting later this month," added Morrison. "In fact, as Europe implodes and Chinese growth slows, there are hopes that some form of coordinated central bank intervention is now on the table. Without this, risk assets look like they have much further to fall. Brent oil prices had already slumped by 15 percent during May, while WTI collapsed by almost 18 percent, as concerns mounted over the state of the faltering world economy. "Oil prices have dipped below the psychological $100-per-barrel with the focus turning away from the Iran situation and onto the state of the global economy after a raft of poor economic results over recent days," added Gary Hornby, an analyst at energy consultants Inenco. "Concerns over Spain have resurfaced after the country's 10-year bond yields nudged close to 7.0 percent, a level seen as unsustainable and continuing uncertainty over the upcoming Greek elections in mid-June." Adding to the sense of panic, latest figures showed a net 97 billion euros ($121 billion) of investor money fled Spain in the first three months of the year -- the highest on record. China meanwhile revealed Friday that its manufacturing activity grew at a much slower rate than expected in May, further confirming the world's number two economy is slowing rapidly. The official purchasing managers index (PMI) fell to 50.4 from 53.3 in April, the China Federation of Logistics and Purchasing said in a statement. A reading above 50 indicates expansion, while a reading below 50 suggests contraction. Later, HSBC said its PMI for May stood at 48.4 compared with 49.3 in April. Back in the United States on Thursday, the government cut its estimate for first-quarter economic growth, to 1.9 percent from 2.2 percent, raising questions over how much of a rebound could be expected in the current quarter. "A slowdown in the rate of growth from both the US and China has added bearish sentiment to future oil demand as US oil stockpiles nudge close to record highs and Chinese manufacturing activity remains sluggish," said Hornby. Market concerns were exacerbated by Thursday's weekly oil stockpiles report which showed an increase of 2.2 million barrels. US stockpiles now stand at the highest level in 22 years for this time of the year.

Source