Crude Oil Extends Slump on Europe Debt Concerns, U.S. Jobs Data

June 7 (Bloomberg) -- Crude oil dropped for a second day on concerns the government debt crisis in Europe will widen and after the U.S. added fewer jobs than forecast last month, suggesting energy demand may be slow to recover.

Oil fell 4.2 percent on June 4 after the Labor Department said that payrolls rose by 431,000 in May. Economists projected a 536,000 gain, according to the median forecast in a Bloomberg News survey. Prices extended declines as the euro dropped against the dollar on concern that Europe’s sovereign-debt crisis will spread into the financial system.

“The U.S. payroll data was on the weak side of expectations and put a question mark next to the rate of U.S. economic recovery,” David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney, said by telephone today. “Concerns about Europe haven’t gone away. There are stories starting to emerge about Hungary’s fiscal position and that is affecting market sentiment.”

Crude oil for July delivery lost $1.24, or 1.7 percent, to $70.27 a barrel in electronic trading on the New York Mercantile Exchange at 9:01 a.m. Sydney time. The contract fell $3.10 to $71.51 on June 4, the biggest one-day drop since Feb. 4.

The U.S. government hired 411,000 temporary workers for the 2010 census, accounting for the bulk of the gain in employment. Private payrolls rose a less-than-forecast 41,000. The growth in jobs in the private sector followed an increase of 218,000 in April that was revised from 231,000.

Hungary’s government reversed course over the weekend, saying there was no danger of default after it spent two days telling the world the nation was at risk of a Greece-like crisis.

Brent crude for July settlement declined 99 cents, or 1.4 percent, to $71.10 a barrel, on the London-based ICE Futures Europe exchange at 9:01 a.m. Sydney time. The contract slipped $3.32, or 4.4 percent, to $72.09 on June 4.