NEW YORK -- Oil prices retreated Friday after a brief spike that pushed New York crude above $70 per barrel for the first time in seven months, before the market settled back on a US dollar rebound.
New York's main futures contract, light sweet crude for delivery in July closed at $68.44, down 34 cents, after a jump to $70.32 a barrel, the highest level since November 4.
Brent North Sea crude for July delivery fell 37 cents to $68.34 a barrel in London, having spiked as high as $69.91.
Analysts said that a surprise rise in the US dollar after a mostly positive American jobs report dragged down oil prices.
The dollar, often regarded as a safe haven in times of economic turmoil, has been dropping on data showing signs of economic recovery.
John Kilduff of MF Global said the market had to cope with "a very strong rally of the dollar which should have engendered losses for crude oil," but that reaction was muddled by a mixed report on US employment.
Kilduff said that after $70 was breached, "we've seen a terrific amount of profit taking."
The US Labor Department said Friday the jobless rate surged to 9.4 percent in May, while the number of job losses slowed to a better-than-expected 345,000.
The report, seen as one of the best indicators of economic momentum, offered conflicting signals about a weak labor market, but suggested that the pace of massive job cuts is easing, a positive sign for a recession-battered economy.
Oil prices have experienced a roller-coaster week in reaction to movements in the dollar, US inventory data and predictions made about crude futures.
A struggling US currency makes dollar-priced crude cheaper for buyers holding stronger currencies, in turn stimulating demand and pushing up prices.
When the dollar strengthens the reverse tends to apply.
Prices slumped on Wednesday after a surprise jump in American crude reserves that indicated weaker-than-expected demand.
The US Department of Energy announced Wednesday that American crude oil inventories leapt 2.9 million barrels in the week ending May 29 to reach 366 million barrels. Most analysts had expected a 1.7-million-barrel drop.
Crude futures rebounded strongly on Thursday after US investment bank Goldman Sachs said crude futures could strike $85 a barrel by the end of 2009.
Goldman Sachs said its bullish price forecast stemmed from a global economic recovery and energy shortage. Further ahead, Goldman predicted that prices could strike $95 a barrel by the end of 2010.
"What has been happening in the last few months is a prologue to a price recovery in the second half of the year as the global economy stabilizes and crude inventories decline," said Phil Flynn of Alaron Trading.
After plunging from record highs above $147 last July on supply concerns, oil prices touched multi-year lows in December, at one point nearing $32 a barrel, as the economic slowdown crushed demand for energy.
