Fin24

Oil prices extend losses

2012-05-07 08:16

Singapore - Oil prices fell in Asian trade on Monday, as French and Greek election results stoked investor concerns over the eurozone debt crisis, while disappointing US economic data also weighed.

New York's main contract, West Texas Intermediate crude for delivery in June stayed below the key $100 threshold, falling $1.45 to $97.04 a barrel in the afternoon.

Brent North Sea crude for June shed 66 cents to $112.52.

"Oil has gone down sharply because the election results have raised concerns about whether the eurozone can beat the debt crisis," said Nick Trevethan, senior commodities strategist at ANZ Research.

"There is a worry about a rejection of austerity and people are also worried about a eurozone recession," he added.

Trevethan said poor US economic data released last week added to the gloom in the market.

French and Greek voters showed their lack of enthusiasm for belt tightening by flocking in weekend elections to candidates and political parties who have called for an easing of austerity measures, sparking fresh concerns over the eurozone debt crisis.

In France, president-elect Francois Hollande warned fellow European leaders he would push ahead with his vow to refocus EU fiscal efforts from austerity to growth and he ousted Nicolas Sarkozy.

Analysts said Sarkozy's loss underscored the politically difficult task of selling austerity measures designed to tackle eurozone nations' huge debts, with Hollande advocating economic growth over deep public spending cuts.

Meanwhile, hopes that Athens will stick to its austerity pledges as parties opposing more cuts won almost 60.0% support in Sunday's general election.

Debt-ridden Greece had agreed to the cuts in exchange for massive bail-out funds.

Dealers were also hurt by disappointing US last week, analysts said.

Official non-farm payroll data released Friday showed the world's biggest economy generated only 115 000 net new jobs last month, less than half the pace at the beginning of the year, although the unemployment rate dipped slightly to 8.1% from 8.2%.