NEW YORK-Oil fell yes­ter­day to cap a fren­zied trad­ing week that sliced prices by a record of more than US$16 a bar­rel on de­mand wor­ries and a move by in­vestors to slash com­modi­ties ex­po­sures. Oil bounced up ear­ly, then be­gan to erase gains as the dol­lar rose. Crude turned neg­a­tive late, ex­tend­ing Thurs­day's shock-in­duc­ing col­lapse, when Brent fell by as much as US$12, a record, in a fu­ri­ous, high-vol­ume ses­sion that saw wave af­ter wave of sell­ing as key tech­ni­cal lev­els were bro­ken. Sell­ing pres­sure on oil and oth­er com­modi­ties came on sev­er­al fronts through­out the week. In­vestors weighed fac­tors from the death of Osama bin Laden to the im­pact of high­er fu­el and com­mod­i­ty costs on con­sumer na­tion economies to the mon­e­tary pol­i­cy in ma­jor economies.

Cas­cad­ing sell stops cre­at­ed a "domi­no ef­fect", said Tom Bentz, di­rec­tor of BNP Paribas Com­mod­i­ty Fu­tures in New York. "It be­came a vac­u­um of less peo­ple try­ing to buy and more peo­ple try­ing to sell." Brent crude fell US$1.67 to set­tle at US$109.13 a bar­rel in heavy trade, with vol­umes twice the 30-day mov­ing av­er­age. The con­tract tum­bled US$16.76 a bar­rel for the week, mark­ing the largest week­ly de­cline ever in dol­lar terms. US crude fu­tures set­tled down US$2.62 at US$97.18 a bar­rel, af­ter trad­ing as high as US$102.38 fol­low­ing sup­port­ive US jobs da­ta. Vol­umes were 70 per cent over the 30-day mov­ing av­er­age. US crude end­ed down US$16.75 for the week, the biggest week­ly drop since the con­tract be­gan trad­ing in 1983.

Loose mon­ey, shaky de­mand

Oil re­ceived ear­ly sup­port from US Labour De­part­ment da­ta show­ing pri­vate em­ploy­ers added jobs in April at the fastest pace in five years. But then the ris­ing dol­lar again dragged prices down. The eu­ro fell to its low­est in more than two weeks and head­ed for its biggest week­ly de­cline against the dol­lar since Jan­u­ary. The move fol­lowed a Ger­man news re­port, lat­er de­nied, sug­gest­ed Greece had raised the pos­si­bil­i­ty of leav­ing the eu­ro zone. "Pay­rolls were bull­ish ini­tial­ly, but the oil mar­ket is wor­ried about de­mand growth," said Bill O'Grady, chief in­vest­ment strate­gist at Con­flu­ence In­vest­ment Man­age­ment in St Louis.

"If Greece were to leave, which is not easy to do, the Eu­ro­pean bank­ing sys­tem would be in great trou­ble, dam­ag­ing the econ­o­my and oil de­mand." Con­cerns about the end of the sec­ond US quan­ti­ta­tive eas­ing pro­gramme in June al­so weighed on prices. The pro­gramme, in which the Fed­er­al Re­serve pur­chased US Trea­sury debt, flood­ed mar­kets with cash and helped dri­ve up crude prices, In­vestors were watch­ing moves by oth­er big oil con­sumers. In­dia's cen­tral bank raised in­ter­est rates by more than ex­pect­ed on Tues­day, and ex­pec­ta­tions No 2 oil con­sumer Chi­na could take sim­i­lar ac­tion hit crude on Wednes­day.