* U.S. services sector growth slows in Aug, weighs on oil
* U.S. nonfarm payrolls slip less than expected in Aug
* Hurricane Earl weakens as it churns up East Coast
* Coming up: U.S. Labor Day holiday on Monday
(Recasts, updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, Sept 3 (Reuters) - Oil prices eased on Friday as
weak U.S. services sector data revived concerns about slowing
economic growth, while a weakened Hurricane Earl posed less of
a threat to refineries near its path.
A report that the United States lost fewer jobs than feared
in August boosted oil early, but a later report showing tepid
growth in the U.S. service sector sent prices lower. Oil
bounced to finish well above its session low as traders took
defensive positions ahead of a long holiday weekend.
Oil prices ended the week lower for the third time in four
weeks.
U.S. crude for October delivery <CLc1> fell 42 cents, or
0.56 percent, to settle at $74.60 a barrel, having traded from
$73.20 to $75.44. That settlement left prices down from a week
ago, but only by 57 cents.
ICE Brent for October <LCOc1> dipped 26 cents, or 0.34
percent, to settle at $76.67 a barrel, after trading from
$75.33 to $77.46.
Crude prices began a slump toward session lows after an
Institute for Supply Management report showed the U.S.
non-manufacturing sector grew an eighth straight month in
August, but at a slower pace than July and at a rate below
expectations. []
"The ISM number let out some of the steam and pulled (crude
prices) back," said Chris Dillman, analyst at Tradition Energy
in Stamford, Connecticut.
Earlier, crude prices bounced higher after a report showed
U.S. employment fell for a third straight month in August, but
declined far less than expected and there was an unexpected
rise in private sector hiring. []
"Today's dichotomy between the equity/euro strength and oil
price weakness following the employment report relates to
increasingly bearish petro fundamentals," Jim Ritterbusch,
president at Ritterbusch & Associates in Galena, Illinois, said
in a research note.
The weak ISM data, eased storm concerns and bearish
fundamentals were seen helping the oil market shrug off the
weak dollar. A weaker greenback usually is supportive to
dollar-denominated oil, making it less expensive to consumers
using other currencies and lowering the value of the currency
being paid to producers.
The U.S. dollar fell against a basket of currencies <.DXY>
and was weaker against the euro <EUR=>. [] But any
increased attraction to riskier assets resulting from the
less-than-horrid employment report did not accrue to oil.
The broad S&P 500 index closed its best week in eight after
recent economic data, including a stronger-than-expected labor
market report, bolstered optimism that the economy would not
fall back into recession. []
The strength of equities based on expectations of future
economic growth as the recovery progressed has helped bolster
oil prices and kept the focus off high U.S. oil inventories,
tepid demand [] and the global spare production capacity.
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 1
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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Reuters Insider television: http://link.reuters.com/cax29n
Non-farm payrolls graphic: http://r.reuters.com/bup98n
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END OF DRIVING SEASON
Friday's U.S. data arrived ahead of a long weekend and
Monday's U.S. Labor Day holiday is traditionally considered the
end of summer driving-demand season.
Hurricane Earl's path off the U.S. East Coast posed less of
a threat to the region's oil refineries, but still likely to
dampen holiday driving and fuel demand.
Hurricane Earl weakened to a Category 1 storm as it churned
up the U.S. eastern seaboard toward Canada and on Friday a
refiner in Virginia reported normal operations in the wake of
the storm. [] [] []
On Thursday, the U.S. Energy Information Administration had
warned 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. []
But even as the storm approached, the EIA and analysts
noted that bulging inventories would dull any impact from
refinery capacity being shut.
(Additional reporting by Gene Ramos in New York, Barbara
Lewis in London and Alejandro Barbajosa in Singapore; Editing
by David Gregorio)
