Oil falls to near $90 on weak US jobs market

Oil prices fell to near $90 a barrel Friday as a disappointing U.S. jobs figure and a move by China to cool off economic growth dampened expectations of higher crude demand.

By early afternoon in Europe, benchmark oil for February delivery was down $1.06 to $90.34 a barrel in electronic trading on the New York Mercantile Exchange. Crude lost 46 cents to settle at $91.40 on Thursday.

The Labor Department said Thursday that more people filed for unemployment aid last week in the U.S., tempering optimism that a strong economic recovery is under way.

In China, meanwhile, the central bank raised the amount of money banks must keep on reserve, an attempt to counter inflation and hold back growth. This, in turn, was seen a possible sign that China's oil consumption would be reduced.

Some analysts expect the U.S. economy to stumble this year, weakening crude appetite. Capital Economics forecasts the oil price will fall to $75 in 2011.

However, most economists — eyeing signs of improving U.S. crude demand joining still-strong consumption in emerging markets — expect oil to breach $100 this year.

"U.S. oil demand in the second half of last year finally began to show strong growth again," Morgan Stanley said in a report. "Importantly, we are still some way currently from the oil price challenging overall consumer spending."

Morgan Stanley is predicting oil will average $100 in 2011.

In other Nymex trading in February contracts, heating oil rose 0.14 cent to $2.6105 a gallon while gasoline futures gained 1.26 cents to $2.4585 per gallon. Natural gas futures added 1.7 cents to $4.424 per 1,000 cubic feet.

Brent crude was up 28 cents to $98.34 a barrel on the ICE Futures exchange in London.