Crude oil fell after service industries grew in August at the weakest pace in seven months, bolstering concern that the US economic rebound will slow.
Futures slipped after the Institute for Supply Management's index of non-manufacturing business, which covers about 90 per cent of the economy, fell to 51.5 in August from 54.3 the prior month. It was the smallest gain since January. Prices rose earlier when a government report showed companies in the US added more jobs in August than forecast.
"Prices are still pretty lofty, given supply and the economic backdrop," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "The economic outlook is at best mixed."
Crude oil for October delivery declined 42 US cents, or 0.6 per cent, to settle at $US74.60 a barrel on the New York Mercantile Exchange. Futures slipped 0.8 per cent this week.
There will be no floor trading on the Nymex on September 6 because of the US Labor Day holiday, and all electronic trades will be counted as part of the September 7 session.
Brent crude oil for October settlement slipped 26 US cents, or 0.3 per cent, to end the session at $US 76.67 on the London-based ICE Futures Europe exchange.
The Labor Department said that private payrolls advanced by 67,000, after a revised 107,000 increase in July. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 per cent.
"We had two pieces of critical economic data on the Friday before the Labor Day weekend," said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. "Prices were bid up after the payroll number, and when the ISM came out investors sold off."
