NEW YORK (MarketWatch) -- Crude-oil futures moved lower Friday, heading for their biggest weekly losses in nearly two months, after government data showed the unemployment rate in the U.S. rose to the highest level in 26 years in August.
The Labor Department reported the unemployment rate rose to 9.7% last month, higher than the expectation of 9.5%. Also pushing oil lower, the U.S. dollar strengthened against most of its rivals.
Crude for October delivery slid 41 cents, or 0.6%, to $67.88 a barrel on the New York Mercantile Exchange. Trading remained volatile Friday, with the benchmark contract moving between $67.12 and $69.70.
Oil is set to end the week down more than 7%, the biggest weekly loss since the week ended July 10.
"It's pretty choppy this morning and I'll say [crude is] off of the economic data," said Zachary Oxman, managing director at TrendMax Futures. "I'm more following gasoline futures today as that market is taking it on the chin again, just like natural gas."
October reformulated gasoline fell 1.95 cents, or 1.1%, to $1.7733 a gallon.
The Energy Information Administration reported earlier this week that last week's gasoline demand increased more than 4% from the previous week to reach the highest level in three months.
Higher gasoline demand resulted in a sharp drop in U.S. inventories. Still, gasoline inventories were in the upper half of the average range for this time of year.
"Most recently, the oil price did not react to positive U.S. data, which leads us to conclude that there is a change in sentiment on the oil market," said analysts led by Barbara Lambrecht at Commerzbank in a note.
In its monthly report, the Labor Department also said August nonfarm payrolls fell by 216,000, smaller than expectations. See Economic Report.
In currencies, the dollar rose against most of its major rivals, with the dollar index (DXY 78.35, -0.11, -0.14%) up 0.1%.
In other commodities, October heating oil fell 1.97 cents, or 1.1%, to $1.7153 a gallon.
October natural gas rose 7.1 cents, or 2.8%, to $2.579 per million British thermal units. The contract tumbled more than 7% in the previous session. Natural gas is set to end the week down about 15%.
The EIA reported Thursday U.S. natural gas inventories rose 65 billion cubic feet in the week ended Aug. 28, in line with analysts expectation.
The natural gas supply data "set the traders running," said Charles Perry, president of energy-consulting firm Perry Management. For now, the $2.50 level "seems to be a support level, but speculation is if it drops below $2.50 very fast, the next stop is $2."
On Wall Street, stocks moved between gains and losses. The United States Oil Fund (USO 35.37, +0.05, +0.14%) slid 0.8% and the United States Natural Gas Fund (UNG 9.42, +0.41, +4.55%) rose 2.1%.
