UPDATE 1-Oil slips from three-week high, holds above $74

                                
 * U.S. oil demand jumps 8 pct from year earlier -EIA
                                
 * Coming Up: U.S. May non-farm payrolls report; 1230 GMT
                                
 * For a technical view, click: [ID:nSGE65300A]
 (Adds oil spill implications, updates prices)
                                
 By Alejandro Barbajosa
                                
 SINGAPORE, June 4 (Reuters) - Oil slipped on Friday from
its highest closing price in three weeks as investors remained
sceptical that rising U.S. demand and falling stockpiles would
prevail over concern Europe's debt crisis may deepen.
                                
 U.S. oil demand jumped 8 percent in the past four weeks
from a year ago, government statistics showed on Thursday, led
by a 17 percent surge in distillates as transport and industry
lifted diesel use. Crude and gasoline stocks fell last week.
[EIA/S]
                                
 Traders are now looking to Friday's U.S. non-farm payrolls,
expected to show a fifth straight month of gains in May, as the
next economic indicator to drive oil prices. [ID:nN01175887]
                                
 U.S. crude for delivery in July <CLc1> shed 30 cents to
$74.31 a barrel at 0503 GMT, after jumping 2.4 percent on
Thursday to close at $74.61, the highest settlement for a
front-month contract since May 12. ICE Brent <LCOc1> dipped 21
cents to $75.20.
                                
 "Prices rebounded well yesterday following another pretty
strong set of U.S. demand data and early readings of a
potentially active hurricane season," said Yingxi Yu, a
Singapore-based commodities analyst with Barclays Capital.
                                
 "But people are still generally quite nervous. This tension
between very strong fundamental readings and still very
cautious sentiment about the future will continue to lead to
pretty high volatility. Ultimately strong fundamentals will
take hold."
                                
 Oil was heading for a second straight week of gains, helped
by forecasts for an intense Atlantic hurricane season that may
impact operations in the energy-rich Gulf of Mexico this
summer.
                                
 The U.S. dollar and Asian stocks held on to recent gains on
Friday ahead of the U.S. jobs report, supporting a cautious
shift back into riskier assets this week. [MKTX/GLOB]
                                
 But fears about tougher funding conditions in Europe and
the impact of tighter fiscal policy on growth may keep a heavy
lid on the nascent revival in risk taking. [ID:nN03268754]
                                
 The fundamentals of the oil market painted a brighter
picture. Both crude and gasoline stockpiles in the U.S. posted
bigger-than-expected drops last week, falling by 1.9 million
barrels and 2.6 million barrels respectively, the Energy
Information Administration said on Thursday.
                                
 "We have been getting very strong indications from macro
data that industrial activity is rebounding very strongly in
the U.S.," Yu at Barclays said.
                                
 HURRICANES SEEN STIRRING SPILL
                                
 The Atlantic hurricane season may be the most intense since
2005, when hurricanes Katrina and Rita severely disrupted U.S.
oil production, refining and consumption by crashing through
Gulf of Mexico energy facilities, the U.S. government's top
weather agency said last week. [ID:nN2798815]
                                
 This season, which began on June 1, may register 14 to 23
named storms, with 8 to 14 developing into hurricanes, nearly
matching 2005's record of 15, according to the National Oceanic
and Atmospheric Administration.
                                
 "In terms of the impact on the oil market, hurricanes tend
to be something of a double-edged sword as they can threaten
both upstream and downstream, and both supply and demand,"
Barclays said in a weekly report on Thursday.
                                
 The path of a storm could also determine whether the
month-and-a-half-old oil spill from BP's Deepwater Horizon well
approaches the mainland or washes away, Barclays said.
                                
 "In general terms, a westerly storm track is more likely to
drive oil towards shore, and an easterly track is more likely
to drive it out further to sea," the bank said.
                                
 President Barack Obama said on Thursday a powerful
hurricane could help to break up the worst U.S. spill, despite
fears that the storm season could complicate the clean-up.
                                
 The U.S. government halted issuance of drilling permits and
imposed a six-month moratorium on deepwater drilling after the
April 20 well explosion that triggered the spill, a move which
some analysts say could boost oil prices in the longert-term.
                                
 The outlook for the U.S. Gulf offshore industry is
"darkening further with the extension of the drilling ban,"
Barclays said.
 (Editing by Ed Lane)