Oil Prices Plummet Nearly 4% on Bigger-Than-Expected U.S. Job Cuts

[Editor's Note: For additional insight on the global outlook for oil prices, check out the next installment of Money Morning's Mid-Year Forecast, which will appear on Monday.]

From Money Morning Staff Reports

Crude oil futures plummeted nearly 4% today (Thursday) - reaching their lowest point in a month - after a disappointing jobs report ignited investor fears that the U.S. economy's rebound may be further off than most thought.

A strengthening of the U.S. dollar against most other major currencies also weighed heavily on crude-oil prices.

The U.S. Labor Department said today employers slashed their payrolls by a larger-than-expected 467,000 in June - about 44% more than the drop of 325,000 that had been expected, according to a survey of economists conducted by MarketWatch.com. That followed a work-force reduction of 322,000 in May.

August crude futures dropped $2.58, or 3.7%, to settle at $66.73 a barrel on the New York Mercantile Exchange (Nasdaq: CME) on Thursday, the lowest closing level for a front-month contract since June 3, MarketWatch reported.

"The disappointing jobs numbers raise concern about the strength and timing of a recovery," James Williams, an economist at energy-research firm WTRG Economics, told the news service.

Today's Labor Department report also showed the unemployment rate surged to 9.5% in June, the highest level since August 1983. Although that was less than the 9.6% that economists projected, "the report [still] was terrible," Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., told CNNMoney.com. "It's telling us that there is a lot more pain than people realize that we are going to have to get through before there can be a recovery."

Money Morning has been warning investors for weeks that the United States was headed for a "jobless recovery," and has launched two new news series - a jobless recovery career strategy series, and a mid-year forecast series - that each are aimed at helping readers better cope with the looming uncertainty.

Stocks were hit hard today because of the jobs report. Dow losing 212 points, after a worse-than-expected jobs report hammered hopes that the economy is close to stabilizing.

The Dow Jones industrial Average (INDU) fell 223.32 points, or 2.63%, to close at 8280.74. The Standard & Poor's 500 Index fell 2.91%, while the tech-laden Nasdaq Composite Index fell 2.67%.

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