OIL plunged by 8% yesterday, heading for the third biggest daily drop in dollar terms on record, as concerns about economic growth and monetary tightening spurred a commodities sell-off.
US crude tumbled below $100 a barrel in heavy trading volume after weak economic data from Europe and the US fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while US weekly jobless claims hit eight-month highs.
World stocks fell and the 19-commodity Reuters-Jefferies CRB index swooned more than 4.5%, heading for its biggest weekly decline since December 2008.
“The longer-term bull cycle is still in place, but this correction may have a life span of several months, as weaker economic data is fueling this correction to a large part,” said Sterling Smith, senior analyst for Country Hedging Inc in Minnesota.
Brent crude futures for June traded down $10.28 to $110.91 a barrel at 2:10 p.m. EDT, the fourth straight day of losses, smashing below the 50-day moving average as the sell-off picked up steam after prices dropped below $120 a barrel.
US crude dropped below $100 for the first time since March 19. It was off $9.54 at $99.70 a barrel.
Selling pressure on oil and other commodities came on several fronts this week, with investors weighing factors from the death of Osama bin Laden to the impact of higher fuel and commodity costs on the economies of consumer nations to monetary policy in major economies.