* U.S. June nonfarm payrolls drop, pressures oil
* Prices head for biggest weekly drop since early May
* Coming up: ISM non-manufacturing index, Tuesday
(Recasts, updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, July 2 (Reuters) - U.S. crude oil prices fell a
fifth straight day to a three-week low on Friday as bearish
U.S. job data fanned fears of a double dip recession.
U.S. crude oil futures <CLc1> slipped 81 cents, or 1.11
percent, to settle at $72.14 a barrel, the weakest close since
June 8. The $71.62 intraday low was the weakest since prices
fell to $70.75 on June 8.
U.S. crude prices fell $6.72, or 8.52 percent, for the week
the steepest decline since the week ending May 7, when prices
sank more than $11, or nearly 13 percent as Europe's debt
crisis put markets in a swoon.
(Graphic: http://link.reuters.com/gyp55m)
ICE Brent crude oil futures <LCOc1> fell 69 cents, or 0.95
percent, to settle at $71.65, the weakest close since May 25.
Oil prices initially seesawed after the Labor Department
reported U.S. nonfarm payrolls fell 125,000 in June, more than
expected and the first 2010 decline. []
But the report also showed the unemployment rate fell to
9.5 percent, from 9.7 percent in May. Jobs were expected to
have fallen 110,000, according to a Reuters survey.
Adding to the anxiety about the economy, the government
later reported U.S. factory products orders fell more than
expected in May, the first decline in nine months and the
steepest drop since March 2009. []
The jobs report did show private sector jobs rose 83,000,
less than forecast but more than May's 33,000 tepid rise.
"With all the gloom and doom before the report you could
say it wasn't as bad as it could have been, but it's probably
not a positive for the economy and that's the way the crude
market is looking at it right now," said Robert Yawger, senior
vice president, energy futures at MF Global in New York.
"Demand could get hit a bit," he added.
The weak U.S. dollar helped limit the initial decline after
the employment numbers. The dollar slipped against the euro,
extending Thursday's steep losses. The dollar index <.DXY> fell
0.36 percent.
U.S. stocks ended their choppy session lower as the jobs
data underscored views the recovery is losing steam. []
Trading sources pointed to lighter trading volume ahead of
the U.S. Independence Day holiday as a factor in the
volatility. Trading volume for U.S. front-month crude was just
above 235,000 in post-settlement trading.
Friday's oil price slump came after prices fell more than 3
percent on Thursday, its biggest one-day slide in nearly four
weeks, as weak manufacturing data from China and the United
States fueled concerns the global economic recovery could stall
and even slip back into recession.
In still another sign of bearish sentiment, money managers
cut net long crude oil positions on the New York Mercantile
Exchange in the week through Tuesday, the Commodity Futures
Trading Commission said on Friday. []
After prices surged on storm fears last week, Gulf of
Mexico oil operations continued to restart on Friday after
being shut as a precaution before Hurricane Alex hit Mexico.
[]
(Additional reporting by Gene Ramos in New York, Alejandro
Barbajosa in Singapore and Ikuko Kurahone in London; Editing by
Sofina Mirza-Reid)
