* Front-month crude trading volume hits record
* Dollar index surges on Europe's economic woes
* U.S. unemployment rate declines even as jobs cut
* BlueGold fund says not behind oil's sharp fall
(Recasts, updates with settlement prices, market activity)
By Rebekah Kebede
NEW YORK, Feb 5 (Reuters) - Oil slid 2.7 percent on Friday
to $71 a barrel as front month crude trade hit record daily
volumes, extending losses in the biggest three-day percentage
loss since September.
U.S. crude oil for March delivery <CLc1> settled at $71.19
per barrel, down $1.95, after reaching a session low of $69.50.
U.S. crude on Thursday closed down 5 percent.
London ICE Brent for March <LCOc1> settled at $69.59 a
barrel, down $2.54.
Friday's session, in which trading volume hit a record of
540,000 positions, ended the fourth week in a row of oil price
declines as demand concerns in the United States, the world's
top oil consumer, pressured prices.
Investors fled from risk on Friday and pressured
commodities, with gold dropping to a fresh three-month low and
other metals also down sharply. []
The dollar index, a measure of the greenback's performance
against six major currencies, jumped as concern deepened about
fiscal problems in south European countries and investors
exited riskier plays. [][]
"The dollar remains the focal point for both the equity and
commodity markets as Greece's debt issues put pressure on the
Eurozone," said Chris Jarvis, senior analyst at Caprock Risk
Management in Hampton Falls, New Hampshire.
Additional pressure followed U.S. jobs data, which showed
U.S. employers unexpectedly cut 20,000 in January, even as the
unemployment rate fell to a five-month low of 9.7 percent.
[]
"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.
Crude oil prices have fallen nearly 8 percent over the past
three days, with most of the slide on Thursday when prices
dropped 5 percent, the largest drop since July. Rumors that an
unidentified hedge fund was selling front month crude were also
cited as a negative factor on the crude market on Thursday.
But 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.
[]
RECORD TRADING VOLUMES
On Friday, NYMEX's daily trading volume for all crude oil
futures contracts hit a preliminary 1,007,414 positions, just
below the 1,037,324 reached on Dec. 9. The record was 1,092,509
positions set on June 6, 2008.
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.
(Additional reporting by Robert Gibbons, Gene Ramos, and
Eileen Moustakis in New York, Christopher Johnson in London;
editing by Jim Marshall)
