VIENNA - OIL prices seesawed on Friday after a report showed 240,000 US jobs were slashed in October, driving the unemployment rate to a 14-year high and suggesting that both businesses and consumers will cut back even more on energy use.

By the afternoon in Europe, light, sweet crude for December delivery was down 17 cents to US$60.60 (S$90.57) a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract traded as high as US$62.82. Overnight, prices fell US$4.53 to settle at US$60.77 after dropping US$5.23 the previous day.

Data from the US Labor Department showed the country's unemployment rate rose to a 14-year high of 6.5 per cent in October as another 240,000 jobs were cut, proof the economy is almost certainly in a recession.

The jobless rate zoomed to 6.5 per cent in October from 6.1 per cent in September, matching the rate in March 1994.

So far this year, a staggering 1.2 million US jobs have disappeared.

The falling dollar kept a floor under oil prices. The dollar was weaker Friday after a sharp rally Thursday, when the European Central Bank cut its key rate by half a percentage point to 3.25 per cent, joining the British, Swiss and Czech central banks as they confront a looming recession.

Commodities such as oil are used as a hedge against inflation and a weak dollar. When a central bank cuts interest rates, it tends to weaken that nation's currency. While that helped the dollar against European currencies on Thursday, the dollar fell back down on Friday.

The euro gained to US$1.2765 on Friday from US$1.2681 on Thursday while the British pound was also higher at US$1.5787 from US$1.5753 in the previous session.

Despite the rebound, falling demand for oil due to the economic slowdown continued to weigh on the market.

'There's a lot of gloom and doom right now,' said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

'Mounting bad news on the economic front is negatively affecting oil.' Grim economic news Thursday led traders to dump oil on concerns over weakening demand for crude products, such as gasoline. US economic data revealed retailers saw sales plummet last month to the weakest October level since at least 1969.

The bad news sparked a sell-off in equity markets as well. The Dow Jones industrial average fell 4.9 per cent on Thursday, while Asian markets were mixed Friday. Japan's benchmark Nikkei 225 stock average fell 3.6 per cent while Hong Kong's Hang Seng index rose 3.1 per cent.

'Oil continues to trade in lockstep with stock markets,' said Mr Shum. 'More bad news could push oil into the US$50s.'

Oil prices have fallen nearly 60 per cent since peaking at US$147.27 a barrel in mid-July.

Also contributing to the dreary mood, the IMF made a negative revision to its forecast for the world economy, saying it was now expected to grow at a 2.2 per cent pace in 2009, down from its projection last month of 3 per cent.

The US economy will shrink by 0.7 per cent, down from last month's forecast that it would grow by 0.1 per cent. The economic growth of the 15 countries that use the euro will fall by 0.5 per cent, down from last month's projection of 0.2 per cent growth, the IMF said.

The IMF expects an economic recovery to begin in late 2009.

On the other hand, the International Energy Agency on Friday nearly doubled its forecast for the price of oil over the next twenty years, citing rising demand in the developing world as well as surging costs of production.

According to a summary of its World Energy Outlook, the IEA has hiked its forecast for the price of a barrel of oil in 2030 to just over US$200 in nominal terms, compared to its forecast last year of US$108 a barrel. Measured in constant dollars, the IEA forecasts oil at US$120 a barrel in 2030, up from last year's forecast of US$62.

In London, December Brent crude fell 10 cents to US$57.33 on the ICE Futures exchange.

In other Nymex trading, gasoline futures rose 0.8 cent to US$1.3442 a gallon. Heating oil gained 2.24 cents to US$1.9648 a gallon while natural gas for December delivery fell 9.9 cents to US$6.88 per 1,000 cubic feet. -- AP