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Oil drops below $73 after less than enthusiastic jobs report

Oil prices dropped below $73 per barrel Friday after a report showed that many private companies in the U.S. remain wary of hiring workers.

The nation's payroll grew by 431,000 last month. But private companies added just 41,000 jobs, down from 218,000 in April and the fewest since January. Experts expected the world's largest economy to add a net total of 513,000 jobs in May.

In trading in New York, benchmark crude for July delivery was down $1.92, or 2.6 percent, at $72.69 per barrel. Earlier in the session, it climbed as high as $75.42. The contract rose $1.75 to settle at $74.61 on Thursday.

Prices have been rising recently — after falling from $87 a month ago — amid improving demand for crude products in the U.S. and news that the federal government will stop all new drilling in the Gulf of Mexico following the worst crude spill in American history.

The decline following the unemployment report comes despite signs of improving demand.

"The indication this summer driving season is that demand is picking up in the U.S. I see a gradual creeping up of oil prices to the high $70s as we go deeper into summer," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

However, concerns over Europe's debt problems and slowing growth in China could put a lid on gains in oil prices, Shum said. And stubbornly high unemployment in the U.S. would also damp investors' spirits.

A stronger dollar was also limiting oil prices Friday by making crude more expensive for investors holding other currencies.

The euro fell to $1.2038 from $1.2182 late Thursday in New York.

The moratorium on new drilling could slow oil production in the Gulf and boost oil prices. An e-mail obtained by The Associated Press from the Gulf Coast office of the Minerals Management Service said that "until further notice" no new drilling will be allowed in the Gulf, at any water depth.

So far between 21 million gallons and 46 million gallons of oil has spewed into the Gulf from the 6-week-old spill, according to government estimates.

In other Nymex trading in July contracts, heating oil fell 4 cents to $2.0025 a gallon and gasoline dropped 4 cents to $2.0397 a gallon. Natural gas was down 7 cents at $4.617 per 1,000 cubic feet.

In London, Brent crude was up 2 cents at $75.43 a barrel on the ICE Futures exchange.

Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.

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