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NEW YORK - Oil prices tumbled Friday as official data showed unemployment hitting a fresh 26-year high in the United States, raising fresh doubts about the economic recovery and energy demand.
Prices had risen back above 80 dollars a barrel on Friday ahead of the jobless numbers.
New York's main contract, light sweet crude for delivery in December dropped 2.12 dollars to close at 75.87 dollars a barrel, a drop of 2.75 percent drop that wiped out gains from earlier in the week.
Brent North Sea crude for December delivery shed 2.12 to settle at 75.87 dollars in London trade.
The US unemployment rate jumped to 10.2 percent in October as 190,000 jobs were shed, the government said Friday in data highlighting ongoing struggles of an economy emerging from recession.
The Labor Department report, seen as one of the best indicators of economic momentum, showed a rise in the jobless rate, up from 9.8 percent in September, to the highest since 1983. But the number of jobs lost narrowed to the lowest level in more than one year.
Analysts said the weaker-than-expected labor report raised fresh doubts about the sustainability of the US economic recovery, and energy demand.
"The 10.2 percent unemployment rate is somewhat startling, the worst in 26-1/2 years," said Mike Fitzpatrick at MF Global.
"Naturally, this data will not provide much intellectual substance to an argument that concludes the economy is recovering, as the recent (growth) data suggests; nor for that matter, for energy demand growth," he added.
"What is distressing is the amount of stimulus expended so far, and the spending yet to come with such clearly minimal benefit. The psychological fallout must also be considered. Consumers will need to pull back the pall of job loss and possible foreclosure before they open their wallets again."
Andy Lipow at Lipow Oil Associates said the unemployment report delivered a major blow to oil prices.
"With higher unemployment it's going to impact demand more significantly than the market had anticipated," he said.
"Not only are a higher amount of people out of work, the people who are employed are going to be concerned about their future job prospects and will hold back on spending over the next couple of months."
Ahead of the data, analysts warned about slack energy demand as the global economy struggles to recover from the financial crisis.
The US Federal Reserve on Wednesday held rock-bottom interest rates for "an extended period" and kept trillion-dollar stimulus measures in place to support a fragile recovery from recession.
As expected, the Fed held its key federal funds rate at a historic low of zero to 0.25 percent, where it has been since last December to help pull the economy out of the worst downturn since the Great Depression.
- AFP /ls
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