Oil prices plunge on US sequester concern

Crude prices dropped to a multi-week low as the across-the-board spending cuts in the U.S. offset upbeat economic data. The 85-billion dollar spending cuts taking effect Friday were set to hurt various governmental departments. "It's going to hurt individual people and it's going to hurt the economy over all," said U.S. President Barack Obama. Traders took money out of the energy market for fear that sequester would hurt the oil demand of the United States, the world's largest oil consumption nation. On the economic front, the U.S. government released a string of optimistic economic data. The U.S. purchasing managers index (PMI) climbed from 53.1 percent in January to 54.2 in February, the highest level since June 2011 when the index registered 55.8 percent, said the U.S. Institute of Supply Management (ISM). Manufacturing has been a bright spot in output and employment since the recession ended in June 2009. Consumer spending in the U.S. rose in January even as incomes dropped. The U.S. Commerce Department announced Friday that personal income decreased 3.6 percent in January compared to an increase of 2.6 percent in the previous month, while personal consumption expenditures rose 0.2 percent, higher than an increase of 0.1 percent. The Thomson Reuters/University of Michigan final index of consumer sentiment for Americans advanced to 77.6 in February from 73.8 in January, also higher than the preliminary reading of 76.3. Light, sweet crude for April delivery lost 1.37 dollars, or 1. 48 percent to settle at 90.68 dollars a barrel on the New York Mercantile Exchange. Brent crude for April delivery fell steeply by 92 cents, or 0. 82 percent, to close at 110.46 dollars a barrel.