By Nick Godt, MarketWatch
MUMBAI (MarketWatch) — Benchmark crude-oil futures slumped 4% during Asian hours Friday, reaching their lowest level since September 2010, as fears of a possible U.S. double-dip recession and worsening European sovereign-debt woes fueled a global market rout.
After tumbling 5.8% on Thursday, crude oil for September delivery CL1U -2.94% fell another 4% to trade as low as $82.87 a barrel in electronic trading on the New York Mercantile Exchange. It marked the first time a front-month crude-oil contract traded below $83 a barrel since September of last year.
Investors are “suddenly far less complacent regarding the underlying strength of the global economy,” Tim Evans, energy analyst at Citibank, said in a note.
Thursday’s slide came amid growing concerns that the U.S. might fall back into recession following a deal to raise the debt ceiling, which includes severe austerity measures despite recently weak economic data.
U.S. consumer confidence dropped to its lowest level in more than two months, and investors are concerned about massive unemployment ahead of the July jobs report, due out later on Friday. See preview of U.S. jobs report.
In Europe on Thursday, the European Central Bank said it had resumed purchases of government bonds for the first time since March amid increasing concern about Italy and Spain and contagion fears.
“We don’t expect to see the market regain its balance or reverse meaningfully higher without some kind of fresh bullish fundamental shock,” Evans said.
Gasoline for September delivery RB1U -1.56% also gave ground, losing 1.7% to $2.68 a gallon, while heating oil for the same month HO1U -1.59% lost 1.9% to $2.84 a gallon.
