Oil slides on negative jobs report

By Blake Ellis, staff reporter

NEW YORK (CNNMoney.com) -- Oil retreated Thursday as stocks tumbled following a disappointing employment report and amid renewed concerns about economies abroad.

What prices are doing: Crude oil for April delivery fell $1.83, or more than 2%, to settle at $78.17 a barrel.

Click on the chart to view oil prices.

Oil settled at $80 a barrel Wednesday on a weaker dollar and after Federal Reserve Chairman Ben Bernanke reassured investors that the Fed is unlikely to raise short-term interest rates in the near future.

What's driving prices: The Labor Department said the number of people filing new claims for unemployment insurance has jumped 12% over the past two weeks.

Last week, jobless claims surged by 22,000 to 496,000 from a revised 474,000 the previous week. Economists surveyed by Briefing.com had expected 460,000 new claims.

Meanwhile, stocks tumbled after Standard & Poor's and Moody's said they may have to cut Greece's debt rating if the country doesn't take measures to rein in its growing deficit.

Oil traders view the stock market as a leading indicator of economic growth and potential energy demand. As a result, oil prices often follow the major stock indexes.

What analysts are saying: "You've got the situation in Greece and jobless claims rose again, so essentially you're looking at concern about a weaker economy," said James Williams, president and energy economist at WTRG Economics. "And a weaker economy would mean less oil consumption."

Williams said prices are likely to continue to decline down the road as investors worry about the U.S. recovery and economies abroad weaken, reducing demand for oil.

"It's basically a story about expectations of a slower economic recovery, both here and in Europe," he said. "I think OPEC is going to try to keep prices in the $70 to $80 a barrel range, but if we get a lot more bad news out of Europe or the U.S., they could drop near $60 a barrel."

Gasoline prices: The national average for a gallon of regular unleaded gasoline rose to $2.693, up 1.5 cents from the previous day's price of $2.678. This is the seventh consecutive increase, according to motorist group AAA. To top of page

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