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UPDATE 10-Oil dips as weak global economy offsets rise in US jobs

Friday, 5 Oct 2012 | 5:49 PM ET

* Brent premium to U.S. crude hits highest since Oct 2011

* U.S. jobless rate falls to near four-year low

* Supportive U.S. data offset by weak China, Europe reports

* Coming up: API oil stocks data 4:30 p.m. EDT Tuesday

(Adds details, paragraphs 13, 15-17, 19-20)

By Robert Gibbons

NEW YORK, Oct 5 (Reuters) - Oil prices fell in volatile trading on Friday and posted weekly losses as a fragile global economy and uncertainty about Europe's debt crisis offset support from a better-than-expected U.S. employment report.

While U.S. crude retreated 2 percent, North Sea cargo delays and sensitivity to threats of disruptions to Middle East supply limited Brent crude futures' losses and pushed Brent's premium

to U.S. crude to its highest since October 2011.

The U.S. unemployment rate unexpectedly fell to 7.8 percent in September, its lowest level since January 2009 and against economist expectations it would rise.

The report showed nonfarm payrolls rose by 114,000 last month, just above expectations and up from 96,000 added in August. Some analysts and brokers expressed scepticism about the data, which could help President Barack Obama's reelection bid.

The jobs snapshot added to supportive U.S. reports on private-sector job gains and manufacturing released this week, but the numbers have not been enough to counter a more gloomy manufacturing and service-sector picture in Europe and China.

"I don't really believe the jobs data, many oil traders don't, and there is a feeling that if prices get too high the SPR (Strategic Petroleum Reserve) will be released before the election," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com in Chicago.

Ilczyszyn added that the oil market is well supplied and that the strong refined products futures market has been lifted by refinery and supply issues.

Addressing doubts about the validity of the latest unemployment figures, U.S. Labor Secretary Hilda Solis said on CNBC television that the idea that the report was manipulated is "ludicrous."

Brent and U.S. crude shot up 4 percent on Thursday, but the rally only offset a slide of similar percentages the previous session.

Brent November crude fell 56 cents to settle at $112.02 a barrel on Friday, recovering after falling to $110.54. For the week, Brent slipped 37 cents, or 0.33 percent.

Brent fell back below the 50-day moving average of $112.38 and the 200-day moving average of $112.12, technical levels closely monitored by chart-watching traders.

U.S. November crude fell $1.83 to settle at $89.88, back below the 100-day moving average of $89.91, and having dropped as low as $89.01.

Crude trading volumes were above 30-day averages for Brent and U.S. crude.

Brent's premium to U.S. crude increased to $22.14 based on settlements.

Tim Evans, an analyst at Citi Futures Perspective in New York, said there was an emerging seasonal pattern in the Brent and U.S. crude spread as North Sea maintenance coincides with refinery turnarounds in the U.S. Midwest at the start of the fourth quarter.

Only two of the 16 cargoes of North Sea Forties crude oil due to load in October have retained their original dates, trade and shipping sources said on Friday, as almost the entire schedule is deferred due to lower-than-expected production.

The Forties stream is fed by the Buzzard field, Britain's biggest.

U.S. RBOB gasoline futures managed a nearly penny gain on Friday, settling at $2.9525 a gallon, up 0.96 cent. U.S. heating oil , the benchmark distillate futures contract, fell 3.25 cents to settle at $3.1559 a gallon.

Refined products futures were lifted on Thursday by news of a fire on Wednesday at Exxon Mobil's 560,500 barrel-per-day Baytown, Texas refinery, the largest U.S. operating refinery.

Exxon Mobil Corp said Friday it was still assessing damage to the Baytown, Texas, diesel hydrotreater hit by fire on Wednesday and output remains reduced.

The S&P 500 index broke a four-day string of gains, easing from a five-year high reached after the jobs report, as traders took profits ahead of corporate earnings reports start arriving next week.

MIDDLE EAST TURMOIL

Crude oil prices have received support, or have had losses limited, by fears about potential threats to supply, especially in the Middle East as the Syrian civil conflict drags on and as Iran's dispute with the West over Tehran's nuclear program persists.

Turkish Prime Minister Tayyip Erdogan said on Friday his country was "not interested in war (with Syria), but not far from it either" following cross-border attacks this week.

Erdogan's speech highlighted the danger that the uprising against Syria's president, Bashar al-Asaad, will drag in its neighbors.

(Additional reporting by Alice Baghdjian in London and Ramya Venugopal in Singapore; Editing by Dale Hudson, Alden Bentley and Leslie Gevirtz)

((robert.gibbons@thomsonreuters.com)(+1 646 223 6059)(Reuters Messaging: robert.gibbons.reuters.com@reuters.net))

Keywords: MARKETS OIL/

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