| GEO Business|
| Oil prices slide on demand worries|
| Updated at: 0129 PST, Tuesday, July 07, 2009|
NEW YORK: Oil prices slumped Monday, extending heavy losses seen last week as the market reconsidered prospects for a quick recovery from the global economic crisis after weak US labor market data.
Prices slumped despite a new pipeline attack in Nigeria, an important exporter of oil. Meanwhile France and Britain agreed to press Group of Eight partners to support a plan for stabilizing the erratic oil market.
New York's main contract, light sweet crude for August delivery, shed 2.68 dollars to close at 64.05 dollars a barrel as trade resumed after a three-day holiday weekend in the United States.
Brent North Sea crude for delivery in August dropped 1.56 dollars to settle at the same level of 64.05 dollars a barrel in London trade.
"The fear is that the economy is taking the turn for the worse," said Phil Flynn at Alaron Trading. "People just want to get out of oil."
John Kilduff at MF Global said last week's shockingly weak US employment report dampened hopes for recovery from recession in the world's biggest economy, a key factor for energy demand.
"For some time the fundamentals have not squared with prices being seen on the exchange," he said.
Kilduff said that the optimism of the past few weeks was based on the notion of a "green shoots" recovery that now seems more distant.
"The reality, of course, has been that conditions merely got less bad rather than good," he said. "We have always considered employment rates as among the paramount predictors of energy demand and prices.
"The previously noted economic hopefulness has run head-long into the reality of extraordinary joblessness in the US and globally, and there is a growing unease over the legitimacy of the perceived recovery."
A closely watched US Labor Department report last week showed US job losses had surged more than expected to 467,000 in June, pushing the unemployment rate to a new 26-year high of 9.5 percent.
The report, seen as one of the best indicators of economic momentum, reversed the improvement seen the previous month when job losses fell to 322,000.