Oil hovers near $73 in Asia as investors look to US jobs report amid pessimism about economy

Oil hovers near $73 as traders eye US jobs report

Oil prices hovered near $73 a barrel Friday as investors awaited the monthly U.S. jobs report for clues about the strength of global crude demand.

By early afternoon in Europe, benchmark crude for August delivery was down 10 cents to $72.85 a barrel in electronic trading on the New York Mercantile Exchange.

The contract dropped $2.68, or 3.5 percent, to settle at $72.95 on Thursday as a series of reports revealed more negative news about the U.S. economic recovery and heightened fears of a double-dip recession.

The government said jobless claims rose more than expected last week, construction spending declined in May and the number of buyers who signed contracts to purchase homes dropped in May to the lowest level on record dating from 2001.

“Commodity markets are clearly nervous about the decelerating growth trends we are seeing in a number of countries, and certainly the weaker tone in some of the U.S. numbers tops the list in this regard,” said MF Global senior commodity analyst Edward Meir.

Investors will be eyeing the June jobs report, scheduled to be released later Friday, which is expected to show that private employers added 112,000 jobs for the month while the unemployment rate is expected to rise to 9.8 percent from 9.7 percent in May.

“Oil prices remain under the wrath of macroeconomic pessimism,” Barclays Capital said in a report “The market is engulfed in a sentiment which is seeking out to be bearish.”

“We do expect the recovery to support prices ahead, once much of the doom and gloom mindset fades away, but a pervasive air of somewhat irrational nervousness still persists.”

Analysts said that the usually close correlation between oil prices and the strength of the U.S. currency seemed to be loosening.

“Not even the markedly weaker U.S. dollar seems to be able to slow down the decline of oil prices at the moment,” said a report from Commerzbank in Frankfurt. “Therefore, it is very likely that the lower end of the trading range of $70-80, which has been valid for one month, will be tested.”

A weaker dollar makes oil cheaper and a more attractive purchase for investors holding other currencies and vice versa.

In Friday trading, the euro was up to $1.2533 from $1.2480 late Thursday in New York, while the British pound rose to $1.5194 from $1.5152.

In other Nymex trading in August contracts, heating oil rose 1.05 cents to $1.9490 a gallon, gasoline lost 0.24 cent to $1.9952 a gallon and natural gas fell 5.8 cents to $4.796 per 1,000 cubic feet.

In London, Brent crude was up 12 cents to $72.46 a barrel on the ICE futures exchange.

Associated Press writer Alex Kennedy in Singapore contributed to this report.