* Oil down more than $1 from 6-week high of $72.42
* Prices look to fourth week of gains but downside seen
* U.S. July unemployment data expected at 1230 GMT
(Adds comment, updates prices)
By Chris Baldwin
LONDON, Aug 7 (Reuters) - Oil edged down on Friday from a
six-week high as markets looked to upcoming U.S. July employment
data for clues on whether the U.S. economy could be emerging
from recession.
By 0935 GMT U.S. light crude for September delivery <CLc1>
fell 70 cents a barrel to $71.24 after briefly touching as low
as $70.91.
It settled 3 cents down on Thursday when lower U.S. stocks
and a stronger U.S. dollar helped to pull prices off a six-week
high of $72.42.
London Brent crude <LCOc1> fell 60 cents to $74.23.
"It has been a steady slip to the downside most of the
morning. The BOE announcement yesterday put a little bit of
gloom into the market," said Tony Machacek, a broker with Bache
Commodities in London.
On Thursday the Bank of England took a far bigger step than
expected to boost Britain's recession-hit economy and stunned
markets by expanding its quantitative easing plan to 175 billion
pounds from 125 billion. []
WEEKLY GAIN
Oil prices are still on course for their fourth straight up
week as economic confidence has grown, boosting riskier assets
and knocking the dollar.
For much of this year, oil prices have been unusually
closely correlated to stock markets and Friday's bearishness
coincided with weaker equities as investors grew cautious before
the U.S. non-farm payrolls data. []
"The market still looks fairly resilient," analysts at MF
Global wrote in their daily energy report.
"However, at this stage, much rides on what U.S. equities
will do over the next few weeks, as they have indisputably been
the upside driver for most commodity complexes."
A Reuters poll on Wednesday showed the U.S. jobless rate
might hit a 26-year high of 9.6 percent when July nonfarm
payrolls data comes out at 1230 GMT on Friday, but an
improvement over June with 50,000 fewer jobs lost outright.
[]
FUNDAMENTAL SHADOWS
Oil analysts were also wary of very bearish fundamentals as
U.S. inventories have stayed very high and demand has been weak.
[]
Apart from the swollen inventories on land, oil stocks have
built up at sea.
The world's biggest independent oil tanker shipping group
Frontline <FRO.OL> on Thursday said around 50 very large crude
carriers (VLCCs) were storing nearly 100 million barrels of
crude at sea, particularly in the U.S. Gulf and Europe.
[]
"We continue to see sizeable risks to the downside for crude
in the near-term as weaker demand for crude will add to already
weak fundamentals for the complex," said JP Morgan analysts in a
weekly oil report.
"That said, our longer-term outlook is considerably more
positive as the expected boost in demand for the second half of
the year will begin to cut back on commercial inventories around
the world."
Oil already costs more than twice the level in December when
it plunged to below $33, although it is less than half last
July's record above $147.
(Additional reporting by Maryelle Demongeot, editing by Peter
Blackburn)
