By John M. Biers
NEW YORK--Crude oil futures fell nearly 3% after a weak U.S. jobs report reignited concerns about global economic growth.
U.S. light, sweet crude futures were trading at $84.68, down $2.54, or about 2.9%, after the U.S. Labor Department released June nonfarm payrolls figures that fell short of expectations for job creation.
"It's a horrendous number," said analyst Stephen Schork. "It's extremely bearish for oil prices, with the impression being the economy is sucking wind."
Jobs data are closely watched by the oil market because of the importance of global economic expansion to oil demand. However, recent jobs reports have disappointed the market, sowing anxiety about future growth.
Nonfarm payrolls grew by 80,000 last month, the Labor Department said Friday. The politically important unemployment rate, obtained by a separate survey of U.S. households, was unchanged at 8.2%. Economists surveyed by Dow Jones Newswires had forecast a gain of 100,000 in payrolls and the steady June jobless rate.
Brent oil futures, which have garnered support in recent days due to an oil-field strike in Norway, also fell after the jobs report. Brent futures were recently trading at $98.64, down $2.06, or about 2%.
Walter Zimmermann, chief technical analyst at the brokerage United-ICAP, said the latest jobs numbers underscored the weakness of the current global economic recovery.
Analysts and traders say the only potentially bullish factor for oil would be an escalation of the Iran situation. Iran has threatened to blockade the Strait of Hormuz due to tensions with Western powers over Tehran's alleged nuclear program.
"We don't see a case for oil strengthening on the back of the global economy," Mr. Zimmermann said. "If there's no escalation in Iran, we expect oil to get sucked down by the same deflationary trend that is hitting the global economy."
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