Oil tumbles on weak US jobs report for May

Crude prices tumbled on Friday as weak US jobs report for May, weak manufacturing data from China, and a spiralling euro zone debt crisis deepened worries about global economic growth.

On Friday, crude prices started to plummet as soon as the market opened. The main driver was the extremely disappointing payrolls report for May, Xinhua reported.

US Labor Department reported that the country added only 69,000 jobs in May after an increase of 77,000 in April, the smallest gain in a year and far below the estimated 150,000 rise.

Unemployment rate rose back to 8.2 per cent from 8.1 per cent in previous month, the first increase since last June.

A sluggish job market showed that US economy was slowing and weighed heavily on the crude markets against the background of European debt crisis and a China slow-down story.

Out of panic, capital fled out riskier assets of commodities and equities into safe havens like solid currencies and bonds. The US bond yields touched record lows, while the struggling euro fell to 23-month low against the dollar. A strong dollar was bearish to crude prices.

In addition, the Institute for Supply Management said US manufacturing slowed in May, though a gauge of new orders rose to its highest in over a year.

The EU statistics office Eurostat said on Friday that euro zone unemployment hit a record high of 11 per cent, warning that jobless could climb further as the bloc's devastating debt crisis hurt business and lead to government layoffs.

To add to the pressure, China's official Purchasing Managers' Index eased to 50.4 in May, also the weakest reading this year.

Light, sweet crude for July delivery fell by $3.30, or 3.81 per cent to settle at $83.23 a barrel on the New York Mercantile Exchange, the lowest finish since October.

In London, Brent crude for July delivery also declined sharply and broke the mark of $100 a barrel for the first time in eight months.