Record U.S. unemployment figures, rising crude inventories and a dismal global economic outlook dragged benchmark oil prices below $41 a barrel Thursday.
Record U.S. unemployment figures, rising crude inventories and a dismal global economic outlook dragged benchmark oil prices below $41 a barrel Thursday.
A market slump accelerated as the Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967.
A department analyst said that as a proportion of the work force, the tally of unemployment recipients is the highest since August 1983.
Companies have announced more than 125,000 layoffs in January, according to an Associated Press tally
Thursday's bad employment news more than outweighed hopes that an $819 billion plan stimulus plan passed Wednesday night by Congress would give oil markets a bounce. The package, which includes tax cuts for individuals and businesses, should create or save more than 3 million jobs, President Barack Obama said after the vote. The Senate will begin debate on the bill next week.
A fourth straight week of soaring oil inventories also weighed on markets.
Light, sweet crude for March delivery fell $1.19 cents to $40.97 a barrel by afternoon in Europe in electronic trading on the New York Mercantile Exchange. The contract rose 58 cents overnight to settle at $42.16.
The U.S. Energy Department's Energy Information Administration on Wednesday said commercial crude oil inventories jumped 6.2 million barrels from the previous week, almost twice what was expected.
Overall supplies jumped to a 45.9 million barrel surplus, representing a 16 percent increase since 2008.
"We're seeing inventory numbers piling up, so that's going to keep the price of crude capped," said Tey Tze Ming, a trader at Saxo Capital Markets in Singapore.
Crude inventories have grown by more than 20 million barrels in the last month, stoking investor fear that consumer demand is suffering amid huge job losses in recent months.
The implementation of output cuts by OPEC has helped bolster prices, Tey said. The Organization of Petroleum Exporting Countries has announced 4.2 million barrels of production cuts since September, and OPEC Secretary General Abdalla Salem El-Badri said Thursday the organization is ready to make further production cuts if prices don't rise in the coming weeks.
A report released Wednesday by the International Monetary Fund also pressured prices.
The IMF predicted global economic growth will slow to just 0.5 percent in 2009, down a sharp 1.7 percentage points from its November prediction of 2.2 percent.
"The lower GDP growth will have a significant impact on global oil demand," JBC Energy said, in its market report. "We see global demand falling by as much as 480,000 barrels a day."
In other Nymex trading, gasoline futures remained steady at $1.18 a gallon. Heating oil dropped nearly 2 pennies to $1.40 a gallon while natural gas for March delivery rose by more than 2 cents $4.44 per 1,000 cubic feet.
In London, the March Brent contract fell 87 cents to $44.03 on the ICE Futures exchange.
