Oil falls below $100 US

The price of Canada’s biggest commodity export dropped below $100 a barrel US Friday for the first time since February and North American stocks fell for the third straight day after a disappointing report on U.S. job creation.

Light sweet crude for June delivery closed down $4.05, or four per cent, at $98.49 US a barrel in New York. It traded as low as $97.51 during the session. It has fallen by almost eight per cent in the last three days.

Brent crude, used to set the price of oil imported into the United States, lost $2.45 to $113.31 US a barrel.

In Toronto, the S&P/TSX composite index closed down 143.67 points, or 1.2 per cent, at 11,871.23 after the U.S. Labour Department reported that the economy created only 115,000 jobs during April, far less than the approximately 160,000 that economists expected.

The index, which traded down by as much as 190 points during the session, is down three per cent on the week.

The Canadian dollar declined by 0.67 of a cent to 100.45 cents US, a loss of 1.5 per cent this week.

"The very modest increase in U.S. non-farm payrolls in April will raise fears that the recovery is fading fast, just like it did at this time last year," said Paul Ashworth, chief U.S. economist at Capital Economics.

In New York, the Dow Jones industrials were down 168.32 points, or 1.3 per cent, at 13,038.27. The Nasdaq composite index lost 67.96 points, or 2.2 per cent, to 2,956.34 and the S&P 500 index declined by 22.47 points, or 1.6 per cent, to 1,369.10

Oil prices have been falling since Wednesday as analysts and traders increasingly focus on the economy.

High stockpiles are also weighing on prices. The U.S. Energy Department reported Wednesday inventories rose by 2.84 million barrels from the previous week to 375.9 million. That was the biggest one-week increase since September 1990.

U.S. oil consumption dropped 5.3 per cent in the first quarter. Stockpiles at the key delivery point of Cushing, Oklahoma, last week reached a record 43 million barrels, a 22-year high.

Oil has crossed the $100 mark 21 times in the last year, between a high of $113.93 and a low of $75.67 on Oct. 4.

The European economy also is slowing down as eurozone governments continue to struggle with a mountain of debt.

"We're fearful that the economy is slowing more than we originally thought," PFGBest analyst Phil Flynn said.

Investors also focused on weekend elections in France and Greece. In France, President Nicolas Sarkozy has for weeks looked like he would lose to his socialist rival Francois Hollande, but recent opinion polls suggest the election could be tighter than expected.

'We're fearful that the economy is slowing more than we originally thought.' —Phil Flynn, analyst, PFGBest

Though a change in leadership in Paris could prompt a change in the way Europe responds to the debt crisis that's already seen three countries bailed out, the elections in Greece have the potential to prompt far more volatility once markets reopen on Monday.

That is because the traditional parties of right and left will not get anything like the level of support they have been used to.

New Democracy and Pasok are backing the harsh terms of the most recent bailout, unlike many of the smaller parties that may well garner some support in Sunday's elections.

European markets were lower with London's FTSE 100 index closing down 2.01 per cent, Frankfurt's DAX declining 1.97 per cent and the Paris CAC 40 dropping 1.90 per cent.

Earlier in Asia, Hong Kong's Hang Seng fell 0.8 per cent and South Korea's Kospi lost 0.3 per cent.

However, mainland Chinese shares rose, with the benchmark Shanghai Composite Index up 0.5 per cent and the Shenzhen Composite Index adding 1.1 per cent.

Stock markets came under additional pressure Thursday as a key gauge of the performance of the U.S. non-manufacturing sector showed further expansion during April but at a slower pace than expected.

The sector accounts for 90 per cent of the U.S. economy and the weak performance helped push the TSX down 215 points yesterday.