The Organization of the Petroleum Exporting Countries said Friday that its oil price plummeted to $107.48 the previous day, going below the $110-mark for the first time in four weeks. The price of the 12-crudes basket of OPEC plunged $3.07 to $107.48 per barrel ((159 liters)) compared to $110.55 per barrel Wednesday, OPEC News Agency said, as global commodity markets were beset by a whole bundle of negative factors, including pessimism about US and Chinese economic growth and Europe's debt crisis and Saudi Arabia's increased oil output. The downward trend is being exacerbated by the mathematical trading programs that are in use, analysts at the consultancy JBC Energy said in Vienna. The OPEC bulletin said that the basket average price for 2010 came to $77.45 per barrel. Kuwaiti crude is one in a basket of 12 crudes produced by OPEC members, along with Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE), and Merey (Venezuela). Oil fell to the lowest in eight months in New York, set for the biggest weekly decline since May, on speculation fuel demand will falter as US economic growth stumbles and Europe's debt crisis worsens. Futures dropped as much as 4.3 percent after tumbling 5.8 percent yesterday. Equities in Asia and Europe slumped. The US added 85,000 jobs last month, leaving the 9.2 percent unemployment rate unchanged, according to economists surveyed before data today. Brent crude rebounded after an oil pipeline explosion in Iran, highlighting supply concerns from the world's biggest producing region. "In terms of the oil market the recent correction is part of the broader move we saw in equities," Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA said. "We have greater cross asset correlation since 2009 due to the injection of vast amounts of liquidity by central banks." Oil prices extended losses to near $86 a barrel Friday amid fears that a slowing global economy will weaken demand for crude, but recovered from earlier lows on reports of an explosion at a pipeline in Iran. By early afternoon in Europe, benchmark oil for September delivery was down 28 cents to $86.35 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it fell as low as $82.87. On Thursday, crude tumbled $5.30 to settle at $86.63. In London, Brent crude gained $1.20 at $108.45 per barrel on the ICE Futures exchange. "There is high volatility and nervous trading in the oil market at the moment," according to an energy report from Sucden Financial in London. Oil and other commodities were dragged down by a plunge in global stock markets as traders lost confidence in U.S. economic growth. The Dow Jones industrial average sank 4.3 percent Thursday and stock markets in Asia and Europe were also sharply lower Friday. Investors fled to lower-risk assets, such as the US dollar, which exacerbated oil's decline. Crude usually falls when the dollar gains since a stronger US currency makes commodities more expensive for investors with other currencies. Analysts, however, said reports of an explosion at an oil pipeline in Iran helped prices pare losses, with the Brent contract even reversing its slide and posting gains. "The general market sentiment has been seriously hurt following heavy losses in the global equity markets," Sucden Financial said. "However, the explosion in the Iran's oil pipeline today provided some support and pushed oil prices higher." All eyes will be on Friday's July jobs report for evidence about the strength of the US economy. Economists expect that 90,000 jobs were created in the US last month, which is not enough to lower the unemployment rate, currently at 9.2 percent. "Economic worries in the US led to fears that oil demand will soften dramatically," energy consultant Cameron Hanover said in a report. "If Friday's jobs number is surprisingly robust or bullish, we could see assets of every stripe rally." Some analysts point to growing crude consumption and robust economic growth in emerging markets to suggest supply and demand fundamentals don't justify the drop in oil prices from $100 two weeks ago. "Commodity market participants are running the risk of being fooled by the gloomy macroeconomic environment and overlooking the bigger picture of a market that remains fundamentally well supported," Barclays Capital said in a report. The drop in crude – oil is down from near $115 in May – should also lower costs for products such as gasoline and help free up some consumer purchasing power. In other Nymex trading in September contracts, heating oil gained 2.89 cents to $2.9228 a gallon while gasoline added 3.68 cents to $2.7740 a gallon. Natural gas futures slid 1.2 cents to $3.929 per 1,000 cubic feet.
