Oil price dips to $52 per barrel as US cuts jobs

New York: Oil prices hovered above $52 a barrel on Friday, slightly lower on the day after a report that US unemployment in March soared to a 25-year high.

But optimism that the economy will soon turn around curtailed losses. Crude had jumped nearly 9 percent on Thursday on hopes that G20 actions would spur an economic recovery.

US light crude for May delivery settled at $52.51 a barrel, down 13 cents, but retained most of Thursday's gain of $4.25 that lifted the contract to $52.64.

London Brent crude gained 48 cents to stand at $53.23 a barrel by 14:56 pm EST (1856 GMT).

"The oil market is struggling between hope and reality, much like what you also see in other markets," said Andy Lebow, a broker at MF Global in New York. "The reality is that there is a dismal demand picture and so it is hard for oil to sustain gains."

Oil moved down by around 1.44 per cent after data came out showing US employers slashed 663,000 jobs in March, lifting the unemployment rate to 8.5 per cent, the highest since 1983.

"The jobs report was apparently priced in and was pretty much in line with expectations," said Mike Fitzpatrick, vice president at MF Global in New York.

A stronger dollar also weighed on oil prices. The greenback firmed as rising US jobs data dulled market optimism and enhanced the dollar's safe haven status.

CHANGE FOR THE BETTER?

Despite Friday's losses, some market optimism remained. Oil made its largest one-day percentage gain in three weeks on Thursday as markets rallied after world leaders at the G20 summit announced a trillion-dollar deal to act on the economic crisis.

"The equities market is turning around here and the oil market is tracking it. The long side of the (oil) market has seen investments increase in February and March as a lot of participants think that things are changing for the better here," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut. "Yesterday's rally was spurred by the financial side of the market.

But there has been no substantial change in oil fundamentals and unless we see supplies come down and demand improve, it remains to be seen whether the upward trend we've seen lately could be sustained," he said.

The Obama administration expects the economy to begin turning the corner by the end of the year with job growth coming some months after that, said Christina Romer, head of the White House Council of Economic Advisers.

US factory orders rose in February for the first time in seven months, and a rebound in China's official purchasing managers' index (PMI) in March showed the Chinese economy may have bottomed, China's chief statistics official said on Friday.