Interpac Business and Migration Solutions Melbourne Australia

Oil prices fell on Friday as official data revealed a jump in job losses and the unemployment rate in the United States, the world's biggest energy-consuming nation.

New York's main contract, light sweet crude for November delivery, dropped 87 cents to close at $US69.95 dollars a barrel.

London's Brent North Sea crude for delivery in November shed $US1.12 dollars to settle at $US68.07 a barrel.

The US Labor Department reported on Friday job losses accelerated to 263,000 in September and the unemployment rate rose to 9.8 per cent, pouring cold water on hopes for strong recovery from recession.

Payroll losses were far worse than expectations for a loss of 175,000 jobs and a revised loss of 201,000 in August.

"Employment will decline by about an additional 800,000 jobs before bottoming out in the first half of next year," said Aaron Smith, a senior economist for Moody's Economy.com.

He said a forecast for the unemployment rate to peak at 10.1 per cent in the first half of next year "may be too optimistic".

Payrolls have now dropped for 21 consecutive months and since the start of the recession, the number of unemployed has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 per cent, according to the Labor Department.

"This grim picture is still measuring the fallout from the severe contraction over the past 20 months," said analyst Mike Fitzpatrick of MF Global.

"Investors, consumers and policymakers all have their fingers crossed that the worst has passed because there certainly is not a stream or a continuum of data that evidences a strong, sustainable recovery is under way."

But he said current economic recovery could sustain oil prices at current levels and higher.

Barclays Capital said in a report on Friday after a brief test of the downside, oil prices were back in the middle of their recent $US65-$US75 per barrel trading range.

"We still expect prices to transition gradually to $US70-$US80 over the next month or so," the report said.

The OPEC cartel has already signalled comfort with that range.

Oil prices had edged higher on Thursday as the market also assessed "constructive" talks between key oil producer Iran and world powers over Tehran's sensitive nuclear program.

Oil demand plunged after the global economy slipped late last year into its worst recession since the 1930s.

This sent oil prices tumbling from historic highs of more than $US147 in July 2008 to around $US32 in December. Prices have since recovered but investors remain concerned over the pace of the upturn.