Crude oil futures extend losses on euro zone contagion fears

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Forex Pros – pros – Crude oil futures were down sharply on Monday, slumping to a six-day low as concerns that the euro zone’s sovereign debt crisis would spread to the region’s core economies prompted investors to shun riskier assets.

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On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at USD94.94 a barrel during U.S. morning trade, retreating 1.65%.

It earlier fell as much as 2% to trade at USD94.34 a barrel, the lowest price since June July 1.

Mounting fears that the euro zone’s sovereign debt crisis could spread to Italy from Greece saw risk aversion sharpen, boosting demand for the safe haven U.S. dollar.

The greenback surged to a seven-week high against the euro, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 1.15% to trade at a two-week high of 76.31.

Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.

Meanwhile, concerns over a slowdown in demand from the world’s two largest oil consumers also weighed.

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Chinese trade data released on Sunday showed that China’s imports of crude oil in June tumbled by 11.5% from a year earlier to 4.8 million barrels per day, the lowest in eight months.

The U.S. Department of Labor said on Friday that nonfarm payrolls rose by a disappointing 18,000 in June, well below expectations for an increase of 89,000, as employers hired the fewest workers in nine months.

The unemployment rate rose unexpectedly from 9.1% to 9.2%, the highest level in six months.

Oil traders have been paying close attention to readings on U.S. employment levels for signs that people are returning to work, thus driving more and using more energy.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery tumbled 1.8% to trade at USD115.49 a barrel, up USD20.55 on its U.S. counterpart.

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