Oil falls to below $89 amid mixed US jobs data

[February 07, 2011]  SINGAPORE (AP) -- Oil prices fell to below $89 a barrel Monday in Asia as traders mulled mixed signals from the U.S. jobs market about economic growth and crude demand.

Benchmark crude for March delivery was down 23 cents at $88.80 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost $1.51 to settle at $89.03 on Friday.

In London, Brent crude gained 23 cents to $100.06 a barrel on the ICE Futures exchange.

The Labor Department said the unemployment rate dropped to 9 percent in January, the lowest rate since April 2009 and a sharp fall from 9.4 percent in December. Economists had expected the rate would rise to 9.5 percent.

However, the government also said that just 36,000 new jobs were created last month, the fewest in four months.

Traders are also closely watching developments in Egypt, where government officials met Sunday with some opposition leaders, including the outlawed Muslim Brotherhood, in an effort to negotiate an end to nearly two weeks of chaotic protests.

Shipping through Egypt's Suez Canal has not been disrupted, but investors are also concerned political instability could spread to oil rich countries in the Middle East.

"Given the phenomenal recovery in (2010 global oil) demand, price breakouts due to geopolitical reasons have become more likely," Barclays Capital said in a report. "That means that geopolitics was always likely to re-establish itself in 2011 as a major component of the oil market."

In other Nymex trading in February contracts, heating oil rose 0.9 cent to $2.73 a gallon and gasoline gained 1.5 cents to $2.45 a gallon. Natural gas futures for March delivery were down 6.8 cents at $4.24 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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