Crude oil prices tumble on euro debt, US jobs jitters

(NEW YORK) - Oil prices slumped nearly four dollars Thursday following a surprise rise in US initial weekly jobless and an European debt crisis.

New York's main futures contract, light sweet crude for delivery in March, dived 3.84 dollars to 73.14 dollars a barrel.

London's Brent North Sea crude for March plunged 3.79 dollars to 72.13 dollars a barrel.

The sharp price declines came as European and US stock markets plunged Thursday on growing concern over debt troubles in some eurozone economies and after a higher-than-expected jump in US jobless claims.

The euro also sank under the 1.38-dollar mark for the first time in seven months amid a flight to the safe-haven US dollar.

"Sovereign debt concerns have led to a global sell-off; commodities have outpaced the broader losses in the equity markets," analysts at Briefing.com said in a clients note.

"Poor bond auctions in Portugal yesterday and Spain today have spurred concerns regarding unhealthy debt levels of respective countries," they said.

Also dogging the market was a US Labor Department report that seasonally adjusted claims rose to 480,000 in the week ending January 30, up 8,000 from the prior week's upwardly revised 472,000.

The reading was worse than the consensus forecast of 455,000 new claims.

Initial claims have risen in three of the past four weeks, a trend that had not occurred since August, the data showed. The last time new claims were so high was in the week ending December 12.

The disappointing initial claims numbers come ahead of Friday's January unemployment and jobs data. Most analysts expect the Labor Department will report unemployment held steady at 10 percent and the economy created 15,000 jobs, after a loss of 85,000 in December.

"Short covering before the jobs number has not replaced the pall of pessimism that has descended on the markets," said Mike Fitzpatrick of MF Global.

Bart Melek of BMO Capital Markets said, "Risk appetite is down considerably.

"At the end of the day, the concern is that global growth is going to slow down."

Crude oil prices were also down Wednesday after a surprise jump in oil inventories in the United States, the world's biggest energy consumer.

It has been a roller-coaster ride for oil prices after they soared early in the week on growing optimism about global economic growth in the wake of positive US manufacturing data.

The market had also won support from news of fresh unrest in Nigeria's key oil-producing region.

"The euphoria arising at the start of the week from manufacturing data seems to have come to a temporary end, having contributed a hefty increase in prices," said PVM Oil Associates analyst Philip Wiper.

"There is a need for something extra to give the market its next fix, and hopes will be high for tomorrow's nonfarm payroll data from the US."

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