Oil falls in Asian trade on US recovery fears

Posted at 10/05/09 12:18 PM

SINGAPORE - Oil fell in Asia Monday as fears about the weak state of the US economy, the world's biggest energy user, led traders to sell, analysts said.

New York's main contract, light sweet crude for November delivery, eased six cents to $69.89 a barrel.

Brent North Sea crude for November delivery dropped eight cents to $67.99 a barrel.

Data released Friday showed the US economy was struggling to recover from recession as job losses accelerated to 263,000, sending the unemployment rate to a 26-year high of 9.8% in September.

Payroll losses were far worse than expectations for a loss of 175,000 jobs, while there was an upwardly revised loss of 201,000 in August.

"There are ongoing worries about the pace of economic recovery after the disappointing US jobs data," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

"At the top of traders' mind now is the pace of economic recovery and the US economic situation still looks shaky," he said.

Payrolls have dropped for 21 consecutive months and since the start of the recession, the number of jobless has increased 7.6 million to 15.1 million, while unemployment has doubled to 9.8%, Labor Department figures show.

Barclays Capital said in a report Friday that after a brief test of the downside, oil prices were back in the middle of their recent $65-75 trading range.

The report said it expects prices to gradually move up to $70-80 over the next month or so, a range the OPEC oil cartel has already signalled comfort with.

Oil demand plunged after the global economy slipped late last year into its worst recession since the 1930s.

This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December. Prices have since recovered but investors remain concerned over the pace of the upturn.