* Oil down more than $1 from 6-week high of $72.42
* Prices look to fourth week of gains but downside seen
* U.S. July unemployment data expected at 1230 GMT
(Updates prices, recasts ahead of U.S. data)
By Chris Baldwin
LONDON, Aug 7 (Reuters) - Oil edged down on Friday from a
six-week high as markets looked to U.S. July employment data for
clues on whether the Uited States could be emerging from
recession.
By 1156 GMT U.S. light crude for September delivery <CLc1>
fell 54 cents a barrel to $71.40 after briefly touching as low
as $70.91.
It settled 3 cents down on Thursday when lower U.S. stocks
and a stronger U.S. dollar helped to pull prices off a six-week
high of $72.42.
London Brent crude <LCOc1> fell 42 cents to $74.41.
"It has been a steady slip to the downside most of the
morning. The BOE announcement yesterday put a little bit of
gloom into the market," said Tony Machacek, a broker with Bache
Commodities in London.
On Thursday the Bank of England took a far bigger step than
expected to boost Britain's recession-hit economy and stunned
markets by expanding its quantitative easing plan to 175 billion
pounds from 125 billion. []
Oil prices were still on course for their fourth straight up
week as economic confidence has grown, boosting investor
appetite for riskier assets and knocking back the dollar.
For much of this year, oil prices have correlated closely
with stock markets, and Friday's bearishness coincided with
weaker equities as investors grew cautious before the U.S.
non-farm payrolls data. []
"The market still looks fairly resilient," analysts at MF
Global wrote in their daily energy report.
"However, at this stage, much rides on what U.S. equities
will do over the next few weeks, as they have indisputably been
the upside driver for most commodity complexes."
A Reuters poll on Wednesday showed the U.S. jobless rate
might hit a 26-year high of 9.6 percent when July nonfarm
payrolls data comes out at 1230 GMT on Friday, high to be sure,
but an expected 50,000 fewer jobs lost outright than in June.
[]
FUNDAMENTAL SHADOWS
Oil analysts also expressed wariness over bearish
fundamentals, as U.S. oil inventories have stayed high and
global demand remained weak. []
In addition to swollen inventories on land, oil stocks have
again begun to build up at sea.
The world's biggest independent oil tanker shipping group
Frontline <FRO.OL> on Thursday said around 50 very large crude
carriers (VLCCs) were storing nearly 100 million barrels of
crude at sea, particularly in the U.S. Gulf and Europe.
[]
Industry sources on Friday also told Reuters Morgan Stanley
was expected to store around 2.6 million barrels of gas oil on
ships off Europe []
"We continue to see sizeable risks to the downside for crude
in the near-term as weaker demand for crude will add to already
weak fundamentals for the complex," said JP Morgan analysts in a
weekly oil report.
"That said, our longer-term outlook is considerably more
positive as the expected boost in demand for the second half of
the year will begin to cut back on commercial inventories around
the world."
Oil now costs more than twice what it did in December when
it plunged to below $33, though it is still less than half last
July's record above $147.
(Additional reporting by Maryelle Demongeot in Singapore,
Editing by William Hardy)
