* Technicals: oil to cap rebound at $76.87 []
* Driving season coming to end, hurricanes support
* U.S. fuel inventories at record levels
(Updates throughout)
By Barbara Lewis and Dmitry Zhdannikov
LONDON, Sept 3 (Reuters) - Oil nudged into positive
territory on Friday when the release of stronger than expected
U.S. employment data calmed expectations of a double-dip
recession, although the demand outlook for oil was cautious.
U.S. crude for October <CLc1> rose five cents to $75.07 a
barrel by 1304 GMT, recovering from intra-day losses, while ICE
Brent <LCOc1> rose 21 cents to $77.14.
U.S. employment fell for a third straight month in August,
but the decline was far less than expected and private payrolls
growth surprised on the upside, easing pressure on the Federal
Reserve to prop up growth. []
Earlier this week, positive weekly U.S. jobs data also
helped to offset data that showed U.S. fuel inventories were at
record levels [].
The link between the economy and demand for fuel has helped
to keep oil prices closely tuned to other asset classes rather
than to market fundamentals of supply and demand.
Traders say that could continue, keeping oil positively
correlated to equity markets and negatively correlated to the
U.S. dollar, which when weaker makes dollar-denominated
commodities relatively cheap for holders of other currencies.
"We're still heavily dominated by financials. There was
quite a big build in U.S. inventories, but the market is showing
resilience," said Tony Machacek of brokerage Bache Commodities.
"Anything that will affect currencies, such as non-farm
payrolls, will have a big effect on oil."
World stocks <.MIWD00000PUS> and the dollar against a basket
of currencies <.DXY> also hovered around flat.
U.S. economist Nouriel Roubini told Reuters Insider
Television he believed things could get worse in the United
States in the second half of the year and economic growth could
go below one percent.
"Even if it is not technically a double dip recession, it is
going to feel like a recession," said Roubini, who has been
nicknamed "Doctor Doom" for his pessimistic forecasts.
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To watch the Reuters interview
http://link.reuters.com/cax29n
For Reuters non-farm payrolls graphic, please click on
http://r.reuters.com/bup98n
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END OF DRIVING SEASON
The data arrived ahead of a long weekend as the U.S. Labor
Day holiday falls on Monday, traditionally considered as the end
of summer driving.
As Hurricane Earl swirled up the U.S. eastern coast, it
posed a potential threat to some oil refineries. Although
inventories are so high, any impact on refined product prices
could be limited and the bigger impact might be to temporarily
reduce demand for unrefined crude.
Bad weather could also curb driving demand.
On Thursday, the U.S. Energy Information said Hurricane Earl
could affect 1.1 million barrels per day of U.S. operable
refinery capacity on the Atlantic coast, or about 7 percent of
the nation's total. []
Earl has lost some force and its impact so far has been less
than first thought.
Tropical Depression Gaston has also weakened. Forecasters
said there was still a chance it could regenerate, but it was
too early to tell whether it would head for the Gulf of Mexico
where energy infrastructure is concentrated.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by James Jukwey)
