Oil retreats after unemployment spike
Crude prices end lower after the government reports a 25-year high unemployment rate for March.
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NEW YORK (CNNMoney.com) -- Oil prices ended lower on Friday after the government reported a spike in the unemployment rate.
U.S. crude for May delivery fell 13 cents to settle at $52.51 a barrel in New York. A day before, prices had rallied more than $4 a barrel.
The U.S. unemployment rate rose to a 25-year high of 8.5% in March, as cash-strapped employers trimmed 663,000 jobs from their payrolls, according to a government report. January job losses were also revised higher to 741,000, the largest number of monthly job losses in more than half a century.
The jobs report put a damper on what investors have interpreted as generally more positive signs for the world economy and future crude demand, according to Phil Flynn, senior market analyst with futures brokerage Alaron Trading.
Thursday's "euphoria has worn off a little bit," said Flynn.
Oil had been trading down more than $1 after the report's release, but came off its lows as stocks recovered. The Dow Jones industrial average was up about 0.05% as oil trading closed in New York, but had been down by more than 1% in the morning. The Dow rose more than 3% on Thursday.
The crude market has swung as low as $47.26 a barrel and as high as $52.87 a barrel over the past week as positive economic news came into conflict with still bearish fundamentals.
"This tug of war is prompting this volatility on an almost daily basis," said Jim Ritterbusch, president of trading firm Ritterbusch and Associates.
Yesterday the European Central Bank cut a key interest rate by less than expected, hurting the dollar and sending commodities higher. Oil, like most other commodities, is priced in dollars; so when the dollar weakens, it drives demand in other countries.
World leaders at the G20 conference in London also pledged $1 trillion to strengthen the financial system and boost lending Thursday.
Meanwhile the government reported this week that supplies of unused crude rose by 2.8 million barrels in the previous week.
Refineries were also operating at 81.7% of capacity in that period, which was down from 82.4% utilization reported a year ago, and down from 85.9% of capacity in 2007 - well before the recession began in December of that year.
As demand wanes, there is a "high probability" the International Energy Agency, which helps guide the energy policies of 28 nations, could cut its oil demand forecast for 2009 when it releases its monthly report, Executive Director Nobuo Tanaka said in a television interview.
Last month the IEA said world oil demand, the largest percentage of which comes from the United States, would average 84.4 million barrels a day.
Meanwhile the price of regular gasoline fell 0.4 cents to a national average of $2.041 a gallon at the pump Friday, according to a survey from motorist group AAA. 
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