Oil prices sank under $67 this evening after weak jobs data quashed hopes of a speedy economic recovery in the US - the world's top energy consumer.
Brent North Sea crude for delivery in August dropped $2.17 to $66.62 a barrel, having earlier hit $66.33. New York's main contract, light sweet crude for August delivery fell $2.47 to $66.84 a barrel, after earlier touching $66.54.
US job losses surged to 467,000 in June, pushing the unemployment rate to a new 26-year high of 9.5%, according to data that dampened hopes for an early recovery from recession.
Meanwhile, the dollar rose against the euro and yen as traders returned to the safe-haven currency after those worse-than-expected US job losses and a euro zone decision to keep interest rates stable.
A stronger greenback makes dollar-priced oil more expensive for buyers armed with weaker currencies. In turn, this tends to dampen demand and pull the crude market lower.
Oil also traded in negative territory today after yesterday falls on data revealing a drop in US inventories of petroleum products.
The US Department of Energy said in its weekly report that US crude oil reserves tumbled 3.7 million barrels in the week ending June 26, the fourth weekly drop in a row.
But the department also reported growing domestic inventories of key refined products petrol and distillates. Petrol stocks rose 2.3 million barrels, and distillates, which include diesel and heating duel, increased by 2.9 million barrels last week.
Prices had dropped on Tuesday from eight-month peaks above $73 after new data showed a plunge in American consumer confidence.
The market remains concerned by tensions in key crude producer Nigeria. Nigerian rebels on Monday announced a new raid against a Shell oil facility and said they had killed at least 20 soldiers in a gun battle, a claim denied by the security forces.
The Niger Delta has since 2006 been rocked by violence by armed groups who say they are fighting for a greater share of the regrion's oil wealth for the local population.
