Oil Falls as U.S. Jobless-Rate Increase May Cut Fuel Demand

By Mark Shenk

Sept. 5 (Bloomberg) -- Crude oil fell more than $1 a barrel after a government report showed employers in the U.S. cut more jobs last month than economists forecast, a signal that demand may drop.

Payrolls fell in the U.S., the world's biggest energy consuming country, the Labor Department said today. The euro strengthened against the dollar after the report. U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 3.5 percent from a year ago, the Energy Department said yesterday.

``The jobless number is a sign that there will be further reductions of gasoline consumption,'' said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. ``The market has got to decide whether it will follow the weaker dollar or the bad economy. At the end of the day I think prices will move lower on the threat of demand destruction.''

Crude oil for October delivery fell $1.05, or 1 percent, to $106.84 a barrel at 10:08 a.m. on the New York Mercantile Exchange. Prices are up 41 percent from a year ago.

The dollar traded at $1.4299 against the euro, compared with $1.4325 yesterday. It touched $1.4196, the highest since Oct. 24 earlier today.

Brent crude oil for October settlement fell $1.33, or 1.3 percent, to $104.97 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.