Oil drops below $42 on unemployment data
Crude oil dropped again on Friday, this time to just below $42 per barrel. This drop comes on a report from the Labor Department that nonfarm employment fell by 533,000 in November, making it the worst month for job losses in 34 years. The unemployment rate last month was at 6.7%, which is the highest since October 1993.
Oil dropped on Friday in reaction to this news. MarketWatch quotes an energy economist explaining, “folks without jobs drive less, and those in fear of losing their jobs are minimizing expenditures.” Proving this correct, gasoline consumption in the US has dropped 2.8% in the last month. If the market closes on Friday as expected, without a rebound, oil will have lost more than 20% this week alone, the largest drop since March 2003.
This comes on the heels of a warning by a Merrill Lynch analyst that oil could drop below $25 per barrel next year if the recession hits China hard.
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