* U.S. nonfarm payrolls fall, weigh on equities, oil
* Dollar weakens, helps limit oil losses
* Coming up: CFTC positions data, Friday 3:30 p.m. EDT
(Recasts, updates prices, market activity, changes byline and
moves dateline from previous Cape Town)
By Selam Gebrekidan
NEW YORK, Aug 6 (Reuters) - Crude oil prices fell on
Friday, weighed down by a weak U.S. jobs report that also
pulled Wall Street lower.
But trading was choppy as oil's losses were tempered by the
dollar's <.DXY> broad slump and weakness against the euro
<EUR=>.
U.S. crude for September <CLc1> delivery fell 75 cents to
$81.26 a barrel at 11:53 a.m EDT (1553 GMT), having traded from
$80.75 to a high of $82.67.
Front-month ICE Brent crude <LCOc1> fell 97 cents to $80.64
a barrel.
U.S. nonfarm payrolls fell 131,000 in July, declining for
the second straight month, according to the Labor Department's
monthly report. Employers did add 71,000 private sector jobs,
but that was less than the expected gain of 90,000.
The job losses exceeded the 65,000 drop analysts had
expected and the report's weakness added to concerns about
demand for energy and the struggling economic recovery.
[]
The unemployment rate was pegged at 9.5 percent, steady
with June and lower than the 9.6 percent analysts expected.
Hiring in June was much weaker than previously thought, the
report said.
"The market's reaction to the nonfarm payrolls data has
been an initial sell-off. But the question is whether this will
be sustainable throughout the day. I think people will soon
start thinking that this will increase stimulus and
quantitative easing," said Phil Flynn, analyst at PRGBest
Research in Chicago.
"And, in general, the data is bearish for the dollar. So
although the initial reaction is to the weakened energy demand
because of a bad economy, coupled with the glut in supply, the
longer term market will start focusing on the weak dollar."
The dollar approached a 15-year low against the yen and a
three-month low against the euro after the jobs data came out.
[]
The greenback's weakness helped limit dollar-denominated
oil's losses, and crude futures seesawed and briefly went
positive in morning trading in New York before pulling back
again.
U.S stocks fell in reaction to the report, with consumer
stocks initially the biggest losers. []
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Graphic on oil's returning correlation with currencies:
http://link.reuters.com/hab43n
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Industry sources continued to eye developments in the
Middle East including Israel's border clash with Lebanon and
Iran's dispute with the West over Tehran's nuclear program.
Concern about being too short at the weekend with so much
potential turmoil simmering in the Middle East region could
limit oil's price weakness, sources said.
The UAE said on Friday that militants attacked the Japanese
supertanker that was damaged in a partial explosion in the
Strait of Hormuz on July 28, adding more uncertainty to the
market. []
(Additional reporting by Robert Gibbons in New York, Alex
Lawler in Cape Town, and Alejandro Barbajosa in Singapore;
editing by Jim Marshall)
