Oil prices sink on jobs data

Unemployment data from the US Labor Department hurt oil prices Friday as the numbers pointed to continued weakening of the economy, which could cut demand for oil and oil products further.

According to the Labor Department’s report, the unemployment rate rose to 7.2 percent in December, the highest in sixteen years even though the number of jobs lost to the US economy was only 524,000, many fewer than the almost 700,000 forecast by a private report earlier in the week.

Besides the number of jobs lost, the average work week for those still employed fell to only 33.3 hours in the month, the fewest hours worked on average since 1964.

The Labor Department also reported that the total number of jobs lost in 2008 was at 2.6 million, the most lost in a year since 1945.

Even the news that Saudi Arabia will cut production in February, in line with production targets previously announced by the Organization of Petroleum Exporting Countries did not push prices higher.

Kuwait and Iran made similar announcements earlier in the week.

West Texas Intermediate crude for February delivery was down 88 cents to $40.82 per barrel at the close of floor trade on the New York Mercantile Exchange, while at last report Brent crude was down 4 cents to $44.63 per barrel.

In afternoon trade, Nymex February gasoline futures were up 1 cent to $1.10 per gallon but February heating oil dropped 6 cents to $1.46 per gallon.