Oil futures fell below $100 a barrel in early trading after a weaker-than-expected jobs report.
Light, sweet crude for June delivery dropped to an intraday low of $99.90 before paring some of those losses and moving to $100.10, or down 2.4% on the New York Mercantile Exchange. Brent crude on ICE Futures Europe fell $1.93, or 1.6%, to $114.21 a barrel.
The Nymex contract has not settled below $100 since early February.
"With the global economy continuing to show all of the signs of slowing even further, oil demand growth is going to underperform the projections for this year and likely into next year," said Dominick Chirichella of the Energy Management Institute in a report.
The drop came after the U.S. Labor Department released data showing nonfarm payrolls rose by 115,000 in April, much less than the gain of 168,000 expected by economists surveyed by Dow Jones Newswires. The unemployment rate, obtained by a separate survey of U.S. households, ticked down a tenth of percentage point to 8.1%.
Employment data in the U.S., the world's biggest oil consumer, signals how much diesel and fuel demand may change in coming months. Weak employment usually correlates with lackluster demand as fewer motorists travel to work or take vacations.
Oil prices will most likely stay above $100 for the day but could fall below that amount in the coming week, said Addison Armstrong, senior director of market research at Tradition Energy.
"We're pretty oversold at the moment," Armstrong. "There's a possibility (of going below $100), but I don't expect for that to hold today."
Also weighing on the market is a new exchange rule doubling the amount of money traders needed to provide on their margins, or collateral used to secure the loans necessary to make trades. Although the rule doesn't go into effect for 90 days, traders are raising cash now in preparation, said Carl Larry, market analyst with Oil Outlook.
"You're going to see more people leaving commodities to free up money," said Larry. "But you'll have some bargain hunters if (WTI) goes under $100."
Front-month June reformulated gasoline blendstock, or RBOB, recently rose 3 cents, or 1%, to $3.0173 a gallon. June heating oil fell 3.12 cents, or 1%, to $3.0557 a gallon.
-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjones.com.
