NEW YORK - Oil prices ended the week at the lowest level in nearly two months, weighed down by a stronger U.S. dollar and persistent doubts about the health of the global economy.
Benchmark crude for March delivery on Friday lost US$1.95, nearly three per cent, to settle at $71.19 a barrel on the New York Mercantile Exchange. Oil plunged as low as $69.50 a barrel earlier in the day. That's the cheapest oil has been since Dec. 15.
Crude prices have now dropped more than 14 per cent since cresting at a 15-month high of $83.18 a barrel on Jan. 6.
Energy prices were propped up earlier in the year by predictions that China, India and other developing nations would aggressively boost petroleum imports to feed their growing economies.
But China has since taken steps to control risky bank lending and to cool off its economy.
Meanwhile, Greece, Portugal and Spain are dealing with massive budget deficits, and their continued troubles helped push the euro lower Friday.
A two-day jump in prices earlier in the week evaporated as the U.S. dollar surged against the euro. Analysts said they also suspected investors who had snapped up oil contracts changed their minds and were trying to get rid of them fast, before the weekend.
"It's quite obvious that someone blew up" in their oil investments, analyst and trader Stephen Schork said. "I'm not sure who it is, but someone is bleeding right now."
The U.S. Dollar Index, which measures the greenback versus other major currencies, jumped Friday to its highest level since July. Oil, which is priced in U.S. currency, tends to fall when the dollar strengthens and makes barrels more expensive for holders of foreign money.
Even a surprise drop in the unemployment rate - from 10 per cent to 9.7 per cent - wasn't enough to encourage investors. Manufacturers and retailers may have added jobs, but the government report showed the economy has a long way to go.
Meanwhile, Americans are burning much less fuel than previous years. The Energy Information Administration said this week that U.S. petroleum consumption has dropped for four straight weeks.
"There's a lot of oil sloshing around out there," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "If I were to give a fair price for oil it would be closer to $60" a barrel.
In other Nymex trading in March contracts, heating oil dropped 6.04 cents to settle at $1.8748 a gallon, and gasoline fell 6.44 cents to settle at $1.8864 a gallon. Natural gas added 9.9 cents to settle at $5.515 per 1,000 cubic feet.
In London, Brent crude gave up $2.54 to settle at $69.59 on the ICE futures exchange.