Oil falls towards $67, focus on weak U.S. economy

By Barbara Lewis

LONDON (Reuters) - Swelling gasoline stocks and a far bigger than expected rise in U.S. unemployment drove oil markets down around $2 on Thursday towards $67 a barrel.

In the latest signal the economy of the world's biggest energy consumer was still struggling, data on Thursday showed U.S. employers had cut 467,000 jobs in June and the unemployment rate had risen to 9.5 percent.

U.S. crude fell $2.02 to $67.19 a barrel by 1307 GMT. The contract settled 58 cents lower at $69.31 on Wednesday.

London Brent crude dropped by $1.78 to $67.01.

"There's a sense we're breaking to the down-side because of weak economic data ... unemployment, house prices, lower stock markets," said Christopher Bellew of Bache Commodities.

In addition he cited Wednesday's U.S. government inventory data that showed gasoline stockpiles in the United States rose by 2.3 million barrels last week.

Distillates, including diesel, also rose by 2.9 million barrels, although crude stocks dropped by 3.7 million barrels.

Traders viewed the increase in motor fuel ahead of the U.S. July 4 Independence Day holiday -- which traditionally marks the peak of the U.S. summer driving season -- as a symptom of continued demand weakness.