By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Oil futures fell nearly 3% Friday after data showed the U.S. unemployment rate topped 10% in October, raising worries about petroleum demand.
Crude-oil futures for December delivery ended down $2.19, or 2.8%, at $77.43 a barrel on the New York Mercantile Exchange.
The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday. Nonfarm payrolls dropped by 190,000 in October, bringing the total number of jobs lost in the recession to 7.3 million.
Economists surveyed by MarketWatch were forecasting a rise in the unemployment rate to 10%, with 150,000 lost payroll jobs. Read the full story.
"There are another 190,000 people who won't be driving to work this month," said James Williams, an economist at energy-research firm WTRG Economics. "Cutbacks in spending mean less diesel use to ship goods to consumers, and folks that heat with oil will be lowering their thermostats."
Despite Friday's losses, oil ended the week up 0.6%. It has climbed more than 70% this year.
"The knee-jerk reaction is that the higher unemployment rate will not bode well for future energy demand," said Phil Flynn, vice president at futures trading and research firm PFG BEST Research. "Yet with the upward revisions and the strong productivity, we may see some hopes that this number may not be as bad as it gets."
In currencies trading, the dollar moved higher against most of its rivals, as the disappointing unemployment data raised the greenback's appeal as a safe asset. The dollar index (DXY 75.77, +0.08, +0.10%) fell 0.2%.
Also in energy trading, December gasoline lost 3.2% to $1.9243 a gallon, and December heating oil fell 2.6% to $2.0035 a gallon.
December natural gas dropped 3.9% to $4.595 per million British thermal units.
The Energy Information Administration reported Wednesday that crude inventories fell 4 million barrels in the week ended Oct. 30, with gasoline decreasing 300,000 barrels. The surprising drop helped oil move higher.
The decline in crude inventories came as net imports slumped 8.6%. Total demand for petroleum products remained weak, the data indicated, although gasoline demand rose slightly. See full story.
