Date: June 2012: Crude oil futures - Weekly outlook: June 4 - 8 By Forexpros

Forexpros - Crude oil prices continued to come under heavy selling pressure on Friday, falling to their lowest level since October as disappointing U.S. employment data added to concerns over weakening global growth prospects.  

Elsewhere, Brent prices tumbled below the USD100-level to hit a 17-month low in London.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July settled at USD83.28 a barrel by close of trade on Friday. Earlier in the day, prices fell to as low as USD82.31 a barrel, the lowest since October 7, 2011.

On the week, crude futures plunged 8.8%, their fifth consecutive weekly loss and the largest since the week ended September 23.

Oil prices have fallen nearly 21% in the past five weeks, the largest five-week loss since the week to January 18, 2009. Prices are down almost 25% since hitting a March 1 intraday peak of USD110.53 a barrel.

The Department of Labor said Friday that the U.S. economy added just 69,000 jobs in May, the smallest increase in a year and far below expectations for a gain of 150,000.

The unemployment rate unexpectedly ticked up to 8.2% from 8.1%, the first increase in 11 months.

The number of new jobs created in April was slashed to 77,000 from an original estimate of 115,000, while job growth in March was revised down to 143,000 from a previously reported 154,000.

Oil traders have long been taking cues from the monthly jobs report, the most-closely followed indicator of U.S. employment, because it offers insight into the economic health of the world's biggest crude oil consumer.  

Also Friday, a separate report showed that manufacturing activity in the U.S. slowed in May. The Institute for Supply Management's manufacturing index fell to 53.5 from 54.8 in April, against expectations for a decline to 53.9.

Meanwhile, downbeat manufacturing data from China and Europe hurt prospects for global oil demand, further weighing on energy prices.

HSBC’s China Purchasing Managers’ Index slipped to 48.4 in May versus April’s 49.3, a sign that the world’s second largest economy may be cooling.

A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.

Manufacturing activity in the euro zone also shrank at the fastest pace in three years to 45.1 in May from 45.9 in April, according to the Markit purchasing managers’ index.

Oil traders pay attention to manufacturing numbers, as they are used as indicators for future fuel demand growth.

Ongoing concerns over Spain’s deteriorating fiscal health and mounting fears over a potential Greek exit from the euro zone further weighed.

There are worries that the region’s sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil. The euro zone accounted for nearly 12% of global oil consumption in 2010, according to data from British Petroleum.

Oil futures have been on a rapid decline since the uncertain outcome of the May 6 elections in Greece, which threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.

On the month, NYMEX crude prices lost nearly 17%, the worst one-month drop since December 2008.

Meanwhile, a larger-than-expected build in U.S. oil supplies last week is forcing traders to refocus on the supply and demand picture.

The U.S. Energy Department said in its weekly report that crude oil inventories rose by 2.2 million barrels last week to a total of 384.7 million barrels, the highest level since 1990, underscoring fears over a slowdown in oil demand from the U.S.

The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery settled at USD98.75 a barrel by close of trade on Friday. Prices fell to as low as USD97.56 earlier in the day, the lowest since February 8, 2011.

The Brent contract lost 7.65% over the week. The spread between the Brent and the crude contracts stood at USD15.47 a barrel by close of trade Friday.

For the month, London-traded Brent crude lost 17.5%, the most since May 2008. Prices are down nearly 23% since hitting an intraday high of USD128.38 on March 1.  

A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.

But revived talks between Iran and major powers over Tehran's nuclear ambitions, along with rising Saudi Arabian and Libyan output and signs of slower U.S. economic and employment growth, helped pull oil prices back from first-quarter highs.

In the week ahead, investors will be eyeing an interest rate decision by the European Central Bank on Wednesday.

Market participants will also be watching Thursday’s testimony on the economic outlook by Fed Chairman Ben Bernanke for any indications that the central bank is considering more monetary easing.