Oil retreats from $100 record on economic worry

By Robert Campbell

NEW YORK (Reuters) - Oil retreated further from the $100 a barrel mark on Friday as gloomy U.S. jobs data heightened concern over the health of the U.S. economy.

Equities markets and the dollar also fell after a government report showed the U.S. unemployment rate rose to 5 percent in December -- its highest in more than two years.

U.S. crude settled down $1.27 at $97.91 a barrel after trading as low as $97.10. London Brent crude fell 81 cents to $96.79.

"The jobs data is pressuring stock markets and may be viewed as another negative sign for the economy, which in the long run will actually hurt oil demand," said Tom Bentz of BNP Paribas.

Adding to pressure to oil prices, Mexico's government said the country's main oil export ports had reopened after being shut for several days due to bad weather.

Traders pushed oil to a record high of $100.09 a barrel on Thursday, the second day in a row it traded in the triple digits, after U.S. government data showed the country's stockpiles of crude oil had fallen to a three-year low.

But oil's surge has darkened the outlook for the U.S. economy, already battered by a housing crisis. High oil prices also have threatened economic growth in Europe. Economic troubles could undermine demand for fuel.

"We've already priced in quite a bit of bullish news here," noted Tim Evans of Citigroup in New York. "The fundamental impact of $95 or $100 oil really is bearish. It encourages producers to supply more and really puts the pressure on consumers to get more efficient."

Some analysts have said OPEC's reluctance to increase crude supplies despite oil's break above $100, combined with geopolitical tensions, could keep oil near record levels. Major consuming countries, including the United States, also insist they have no intention of releasing strategic stockpiles of crude oil to curb prices.

The Organization of the Petroleum Exporting Countries agreed at its last meeting in December to keep output unchanged. Officials from the group say exporters can do little to tame oil prices and that world markets are well-supplied.

However OPEC last month pumped beyond the rate targeted in a pact to boost output, led by a rebound in supply from the United Arab Emirates, a Reuters survey showed Friday.

(Additional reporting by Richard Valdmanis in New York, Peg Mackey in London and Fayen Wong in Sydney; Editing by David Gregorio)

(Reporting by Robert Campbell)