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Oil drops to near $87 on jobs report and stronger dollar
NEW YORK (AP) ' Oil prices fell Friday along with the prospects for global economic growth as the government reported the economy added no jobs last month.
Benchmark crude fell $1.76, or 2 percent, to $87.17 after the Labor Department said employers stopped adding jobs in July. The unemployment rate remained at 9.1 percent.
The U.S. jobs report follows a weak manufacturing report from China and concerns that the lingering debt crisis in Europe continues to hold back economic growth there.
Put together, the concern is that the global economy is weakening. A weak economy reduces demand for oil and oil products such as diesel, jet fuel, and gasoline because fewer goods are shipped and people travel and commute less.
In London, Brent crude, used to price many international kinds of oil, fell 94 cents to $113.35 per barrel.
Oil was also pushed down as the dollar rose against the euro and some other currencies. Oil is priced in dollars and becomes less attractive to buyers with foreign currency as the dollar get stronger.
Also, a Libyan official said Friday that five foreign oil and gas companies have returned to Libya to resuscitate production choked off by civil war and sanctions.
This encouraged traders that Libyan might begin flowing sooner than hoped, though most expect it to be several months before significant exports resume.
Along with concerns about the economy, the dollar and increased supply from Libya, there are concerns that oil and gas production in the Gulf of Mexico could be disrupted by a slow-moving storm hovering over the region. Forecasters expect it to develop into a tropical storm later today or Saturday. Some oil companies have evacuated non-essential personnel from platforms in the Gulf as a precaution.
In other energy trading, heating oil fell 3 cents to $3.0225 per gallon and gasoline futures lost 4 cents at $2.8531 a gallon. Natural gas fell 6 cents to $3.988 per 1,000 cubic feet.
Jonathan Fahey can be reached at http://twitter.com/JonathanFahey