Oil Slumps Below $80 on U.S and European Concerns
In New York, crude oil futures for April delivery were down more than 3% earlier in the day, to $77.29 per barrel.
Investors were apparently shaken by an unexpected jump in U.S. jobless claims for the week. According to the U.S. Labor Department, first-time jobless claims increased by 22,000, to 496,000 for the week ending February 20th. Oil prices rose Wednesday following optimistic Congressional testimony from Ben Bernanke. The Federal Reserve Chairman said U.S. interest rates would stay low, to help relieve the faltering economy.
A Force of Its Own
The slowing economy has meant fewer drivers on U.S. and western European roads. That lower demand for energy, in turn, affects oil prices. This is also the time of year when refineries in the U.S. build up their inventories, in anticipation of the peak summer driving season.
The dollar is also near a nine-month high against the euro, in part due to the debt crisis in Greece and other European countries. Oil is traded in dollars, making it more expensive in other currencies.
But some analysts say the oil market's volatility is a force of its own.
"There have been two-dollar swings [in the market] at least five or six times in the last month," says Philip Verleger, an economist and a professor at the University of Calgary. "The question that one has to ask, is why were prices at $80?"