Oil prices lost over $2 to stumble below $78 a barrel Friday as rising U.S. unemployment figures renewed concerns about the economic recovery and consumer demand.
Oil prices lost over $2 to stumble below $78 a barrel Friday as rising U.S. unemployment figures renewed concerns about the economic recovery and consumer demand.
By mid-afternoon in Europe, benchmark crude for December delivery was down $2.16 to $77.46 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 78 cents to settle at $79.62 on Thursday.
The U.S. Labor Department said the economy lost 190,000 jobs in October, while the unemployment rate jumped to 10.2 percent from 9.8 percent in September. It was the first time it surpassed 10 percent since 1983 and the 22nd straight month the U.S. economy has shed jobs, the longest stretch on records dating back 70 years.
Economists had been expecting a decline of around 175,000 jobs in October and an unemployment rate of 9.9 percent.
JBC Energy, an analyst firm in Vienna, said that if the unemployment rate rises "substantially above ... 10.15 percent in 2010, U.S. gasoline demand is likely to erode further."
JBC said two-thirds of the fall in demand would result from less travel by the unemployed while the rest would be caused by the reduction of disposable income.
Crude investors are also watching signs in recent weeks of a drop in U.S. oil supplies, which increased sharply this year as demand shrank. Some analysts forecast higher oil prices next year as the economy strengthens and demand recovers.
"We expect fundamentals to improve as oil demand growth resumes," Morgan Stanley said in a report. "Until the oil market tightens, oil will be dragged in the wake of other risky asset price moves."
Morgan Stanley said it expects oil to average $85 a barrel next year.
Crude has crisscrossed the $80 level for the last few weeks as investors mull weak U.S. consumer demand and a volatile dollar.
On Friday, the euro fell to $1.4841 in European trade from $1.4868 late Thursday in New York, while the British pound retreated to $1.6537 from $1.6586 and the dollar fell against the Japanese yen, buying 90.08 against 90.78 yen Thursday.
In other Nymex trading, heating oil fell 5.46 cents to $2.0030 a gallon. Gasoline for December delivery lost 5.41 cents to $1.9336 a gallon. Natural gas for December delivery plunged 14.8 cents to $4.634 per 1,000 cubic feet.
In London, Brent crude for December delivery shed $2.02 to $75.97 on the ICE Futures exchange.
