Oil falls amid US economic concern

2011-06-03 10:03

Singapore - Oil fell in Asian trade on Friday, erasing early morning gains that were brought about by a slightly weaker dollar amid concerns over the US economy, analysts said.

New York's main contract, light sweet crude for July delivery, dropped 11 cents to $100.29 a barrel and Brent North Sea crude for July delivery fell 7c to $115.47.

A strong US currency makes dollar-priced commodities more expensive for other currency holders, prompting investors to exit the market.

In afternoon foreign exchange trade, the euro was changing hands at $1.4485 compared with $1.4486 earlier in the day. The euro traded at $1.4484 late on Thursday in New York.

The dollar has been pressed by fears over the state of the US economy and dealers are looking to the release later in the day of key jobs figures to get a better idea of the outlook.

"The US non-farm payrolls report for May will be tonight’s key focus," analysts from Singapore's United Overseas Bank said in a commentary.

"While the European debt crisis remains fluid and unresolved, focus is now on the US economy, where it has taken a decisively weak tone as the Fed prepares to wrap up its $600bn government bond-buying programme."

Meanwhile, the US Department of Energy reported Thursday that the country's crude reserves soared 2.9 million barrels in the week ending May 27, instead of declining as expected by most analysts.

A rise in crude stocks is seen as a sign of demand waning in the world's number one oil consumer.