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* Dollar index surges on Europe's economic woes
* U.S. unemployment rate declines even as jobs cut
* Aversion to risky assets rises as equities, euro fall
* BlueGold fund says not behind oil's sharp fall
(Recasts, updates prices, market activity)
By Rebekah Kebede
NEW YORK, Feb 5 (Reuters) - Oil slid below $70 per barrel
on Friday as a stronger dollar and data showing additional U.S.
job cuts weighed on the market.
It was the second straight session of steep declines in oil
prices, which on Thursday posted their biggest one-day fall
since July.
U.S. crude oil for March delivery <CLc1> briefly fell below
$70 a barrel and was down $2.94 to $70.20 per barrel by 11:49
a.m. EST (1649 GMT) after reaching a low below $70. On
Thursday, it touched a 2010 intraday low of $72.42 and closed
down 5 percent.
London ICE Brent for March <LCOc1> fell $3.57 to $68.59.
The dollar index, a measure of the greenback's performance
against six major currencies, leapt as concern deepened about
worsening fiscal problems in south European countries. []
A stronger U.S. dollar makes commodities, like oil, more
expensive for those holding alternative currencies.
U.S. jobs data, which showed U.S. employers unexpectedly
cut 20,000 in January, but the unemployment rate surprisingly
fell to a five-month low of 9.7 percent, oil prices.
[]
"Today's U.S. jobs report for the month of January provided
a significant surprise to the downside, with a drop in the
number of U.S. jobs in January by 20,000," said Jason Schenker,
president, Prestige Economics, LLC, Austin, Texas.
"The big truth of today's report is not that the job market
improved, which it did not. The big truth is that with downward
revisions to previous employment reports, there were more jobs
lost than had previously estimated," he said.
Oil fell 5 percent on Thursday, its steepest daily drop
since July and the fifth-largest trading volumes ever on the
New York Mercantile Exchange (NYMEX) as investors dumped risky
assets.
Rumours over the health of an unidentified hedge fund were
also cited as a negative factor on Thursday as the oil market
fell.
On Friday, oil-focused hedge fund BlueGold denied what it
said were false rumours about its continuing operations and
said it was not behind oil price volatility in recent days.
[]
Oil is now about 50 percent of its record above $147 in
July 2008, down from a 15-month high close at $84 on Jan. 11.
Dealers said Thursday they thought the sell-off was linked
to a hedge fund unloading a big position. []
A sudden rush of volume in front-month NYMEX crude futures
trading during the final moments of open-outcry trading on
Wednesday was followed on Thursday by the fifth-highest trading
volume on record for the contract at nearly 500,000 lots.
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The statement from BlueGold helped calm nerves that traders
said had been frayed by the sharp slide in prices.
BlueGold Chief Executive Officer Dennis Crema told Reuters
he "utterly and completely" denied his company was in any way
responsible for the recent volatility in crude oil prices.
"We ... deny any false rumours surrounding BlueGold's
continuing operations," he added. "Business continues as
usual."[]
(Additional reporting by Robert Gibbons and Gene Ramos in
New York, Christopher Johnson in London; Editing by David
Gregorio)
