Crude oil futures fell 3.3% Friday after a surprisingly weak U.S. jobs report and amid expectations that a Norwegian oil strike would end soon.
Light, sweet crude for August delivery settled at $84.45 a barrel on the New York Mercantile Exchange, down $2.77. Brent crude on the ICE futures exchange settled at $98.19 a barrel, down $2.51 or 2.5%.
Oil futures, already down on the day, fell $1.23, or 1.4%, in the 25 minutes after the U.S. Labor Department reported that nonfarm payrolls for June grew by 80,000, below the 100,000 forecast by economists. The futures were decidedly lower for the rest of the session.
"It's a horrendous number," said analyst Stephen Schork. "It's extremely bearish for oil prices, with the impression being the economy is sucking wind."
Jobs data are closely watched by the oil market because of the importance of global economic growth to oil demand. However, recent jobs reports have disappointed the market, sowing anxiety about future growth.
Mr. Schork said oil prices were generating additional downward pressure from the fall in the broader equity market that also followed the weak jobs report. "They're kind of feeding on one another," Mr. Schork said. The oil market and equities often move in along with each other, given that both are sensitive to prospects for economic growth.
Meanwhile, analysts were closely watching developments out of Norway, where a partial 13-day-old strike of the offshore oil industry has taken off line about 240,000 barrels per day, or 15% of Norwegian oil output. Taking supply off the market should send prices higher.
Norway's Minister of Labor Hanne Bjurstrom urged the oil companies and union representatives to continue talks.
The government can impose compulsory arbitration, in which case the settlement of the conflict is turned over to a committee called The National Wages Board, but the labor minister instead urged the parties to solve the conflict through continued talks. The parties are scheduled to meet at lunchtime Saturday.
Norway's Oil Industry Association threatened to lock out workers and shut down production on the Norwegian continental shelf from Tuesday.
But analysts said the Norwegian minister's involvement suggested a compromise was within reach.
"The expectation is that this should be swiftly resolved," Harry Tchilinguirian, head of commodities markets strategy of BNP Paribas, said Friday.
"The market was fearful that all of Norway's oil production might have been shut in and this does not appear to be happening," said Andy Lipow, president of Lipow Oil Associates, an energy consulting firm in Houston. The market is "expecting that there will be a deal."
Mr. Lipow said oil prices were also negatively affected Friday by the latest retreat of the euro, which fell about 1% compared with the U.S. dollar. Since oil is priced in dollars, a stronger dollar raises the cost for countries that are purchasing oil in other currencies.
Front-month reformulated gasoline blendstock, or RBOB, settled at $2.72, a gallon, down 6 cents. Heating oil futures settled at $2.71 a gallon, down 6.2 cents.
--Christina Zander in Stockholm contributed to this article.
Write to John Biers at email@example.comCopyright (c) 2012 Dow Jones & Company, Inc.
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