Oil falls below $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 more than $2 Thursday to below $67 a barrel.

In the latest signal the economy of the world's biggest energy consumer was still struggling, data 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 $2.45 to $66.86 a barrel by 1530 GMT. The contract settled 58 cents lower at $69.31 Wednesday.

London Brent crude dropped $2.03 to $66.76.

"It shows an economy still in distress that can only be echoed in earnings reports after the holidays," said Mike Fitzpatrick, vice president at MF Global in New York.

In addition, analysts 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.