Dollar and supply trump jobs data; crude falls

Oil prices ended the week tumbling to a seven-week low as massive crude supplies and a surging dollar overshadowed encouraging job numbers.

The U.S. dollar, which is used to price crude contracts, has had an especially heavy influence on oil trading this year. It's helped oil double in price from $40 to more than $80 a barrel in the past several months despite weak consumer demand and bloated supplies.

But as the greenback rallied Friday, oil prices started to fall.

Benchmark crude for January delivery lost 99 cents to settle at $75.47 a barrel on the New York Mercantile Exchange. The contract slumped as low as $74.85 earlier in the day.

In London, Brent crude for January delivery gave up 84 cents to settle at $77.52 on the ICE Futures exchange.

The dollar rose sharply just after the Labor Department said the country's unemployment rate fell to 10 percent in November. The economy shed only 11,000 jobs last month - much better than the 130,000 that Wall Street had expected.

Many energy experts think energy prices are still to high, that the price of crude, gasoline and other fuels has risen too far, too fast.

One need only look at energy supplies to see what the recession has done to demand, both for consumers and heavy industrial users.

The amount of crude available in the U.S. is 6 percent higher than a year ago and its about the same story for gasoline. Distillates are a whopping 23 percent higher than last year and there is nearly 23 percent more heating oil on hand.

There is so much natural gas, the nation's ability to store it is nearly maxed out and in the West and the Gulf of Mexico, storage facilities are filled beyond estimated capacity.

Energy Information Administration statistics show the U.S. has cut back on oil and gasoline use since September. The 18.5 million barrels of petroleum consumed last week is less than what the country used a decade ago.

Crude prices are closer to $80 than $70 per barrel, however, and that has helped support gas prices.

At the pump, retail gas prices increased slightly overnight to a new national average of $2.637 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 4.7 cents cheaper than a month ago, but it's 84.8 cents more expensive than a year ago, when gas prices were falling fast.

In other Nymex trading in January contracts, heating oil fell 2.27 cents to settle at $2.0268 a gallon, and gasoline lost 1.8 cents to settle at $1.975 a gallon. Natural gas rose 12.7 cents to settle at $4.586 per 1,000 cubic feet.

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Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.