Crude oil falls in biggest weekly decline since January

Crude oil fell, heading for its biggest weekly decline since January, on concern Europe's debt crisis will derail the global economic recovery.

Futures erased earlier gains as the dollar strengthened on U.S. employment data and on concern that Greece's debt crisis will spread to other European countries. U.S. gasoline supplies are 7.6 percent above their seasonal norm as the peak driving season approaches, according to the Energy Department.

"A small bubble has burst," said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. "It's not a catastrophe, but market participants are nervous that the problems in Greece may be repeated in Portugal or Spain. It's not about fundamentals now, oil is being driven by capital markets." fundamentals and the huge oversupply of oil."

Crude oil for June delivery fell 76 cents, or 1 percent, to $76.35 a barrel at 9:23 a.m. on the New York Mercantile Exchange. Oil earlier rose as much as 1.4 percent to $78.19 a barrel. Futures are down 11 percent for the week.

Oil settled at an 11-week low of $77.11 in New York yesterday after the euro fell against the dollar and the Dow Jones Industrial Average lost as much as 998.5 points, a 9.2 percent plunge that was the biggest intraday percentage loss since 1987.

U.S. payrolls jumped 290,000 last month, more than the median estimate of economists surveyed by Bloomberg News, after a revised 230,000 increase in March that was larger than initially estimated, figures from the Labor Department in Washington showed today

A 110 billion-euro ($140 billion) aid package to avoid a default by Greece has failed to prevent bond yields from rising, driving up borrowing costs for countries including Spain and Portugal. Moody's Investors Service yesterday placed Portugal on review for a possible downgrade.