26 Dec 2008

Oil drops 9 percent

5:59 pm on 26 December 2008

Oil dropped 9% on Wednesday as another round of gloomy economic data showed the United States has fallen deeper into recession.

US crude settled at $US35.35, down $US3.63 or 9.31%.

The losses came after government data showing US jobless claims rose to a 26-year high and consumers cut spending for the fifth consecutive month in November.

Nearly two million American workers have lost their jobs this year, driving the unemployment rate up to 6.7% and slowing consumer spending as incomes shrank.

The negative economic news reinforced expectations of a continued slowdown in energy consumption.

"Until the price is low enough to break through the cloud of economic gloom and doom, oil is going to be under some pressure," said Mike Fitzpatrick, vice president at MF Global in New York.

Oil prices have dropped about $US110 a barrel since July as a result of the global financial crisis.

OPEC producers have slashed 5% of global oil production to stem the slide.