Crude hits a low of $98 a barrel as global growth stagnates

Crude prices fell below the $100 level for the first time in 8 months, hitting $98 per barrel on Friday, amidst weak global economic data and a deepening of the euro zone debt crisis that has compounded an already bleak scenario.

North Sea Brent crude oil futures fell $4.17 to a 16-month low of $97.70 a barrel in intra-day trading, before recovering to around $98.15 by 1240 GMT. The contract had lost 14.7 per cent in May.

Brent crude prices had surged to $128 a barrel in March 2012, its highest since 2008 amidst concern of supply constraints, following the sanctions imposed on Iran by the US and its European allies.

US sweet light crude, which has already lost 17 per cent in May, also lost $3.97 and was trading at $82.56, down $3.97. US July crude was down $3.45 at $83.08 a barrel, having fallen to $82.56, the lowest since October.

The euro fell to a 23-month low against the dollar on worries about the Spanish banking sector.

Crude prices also took cues from weak US jobs data, poor manufacturing data from China and constant worries about Greece, Spain and the deepening euro debt crisis that dampened the prospects for global economic growth.

While China reported the year's weakest Purchasing Managers' Index reading of 50.4 in May, Germany's manufacturing output declined at a the fastest pace for almost three years.

The Organisation of Petroleum Exporting Countries  (OPEC), on Friday said the cartel saw no immediate need to cut production despite oil prices dropping below $100 a barrel.
 
With the dampened global economic outlook, key oil producers that have boosted production in recent months, are unlikely to revert to pushing prices higher without indications of a further fall, say market analysts.

OPEC had increased oil production by 30 million barrels a day in recent months to calm soaring prices following sanctions imposed on Iran by Western powers. That has now been reduced by 170,000 barrels a day since May.