July 3 (Bloomberg) -- Crude oil fell, set for a third weekly decline, after U.S. unemployment rose to the highest in almost 26 years, signaling continued economic weakness and lower fuel demand in the world’s largest energy user.

Crude oil fell more than $2 a barrel yesterday after the Labor Department said employers cut 467,000 jobs in June. Prices may drop again next week on speculation that U.S. fuel inventories will climb as the recession curbs demand in the world’s biggest energy-consuming country, according to a Bloomberg News survey of analysts.

“The data were much weaker than expected and that is the main reason behind the oil price movement,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “The physical oil market is still imbalanced. It is oversupplied and there is a lot of oil in the market.”

Brent crude oil for August settlement fell as much as 79 cents, or 1.2 percent, to $65.86 a barrel on London’s ICE Futures Europe exchange. It was at $66.37 a barrel at 2:17 p.m. London time. Yesterday, the contract declined 3.1 percent to settle at $66.65 a barrel.

Oil trading in New York is curtailed by the U.S. Independence Day holiday. There will be no floor trading on the New York Mercantile Exchange and electronic trading will be counted as part of the session on July 6.

Crude for August delivery dropped as much as 63 cents, or 0.9 percent, to $66.10 a barrel on Nymex, and was at $66.54 at 2:17 p.m. in London. Oil fell 3.7 percent to $66.73 yesterday.

Employment Decline

June’s employment decline was more than forecast and followed a 322,000 decrease in May. Payrolls were estimated to fall 365,000 after a 345,000 decline initially reported for May, based on the median of 79 economists surveyed by Bloomberg News.

The jobless rate jumped to 9.5 percent, the highest since 1983, from 9.4 percent. U.S. fuel supplies increased last week by more than forecast.

Eighteen of 37 analysts surveyed by Bloomberg News, or 49 percent, said oil futures will decline through July 10. Nine respondents, or 24 percent, said the market will be little changed and 10, or 27 percent, forecast that oil prices will rise. Last week, 55 percent of analysts said prices would drop.

OPEC Is ‘Satisfied’

Oil is heading for its third weekly decline, trading 3.7 percent below its close of $68.92 a barrel on June 26, and 6.4 percent lower than its June 12 close. Brent crude has risen 46 percent this year, reaching a seven-month high of $73.50 on June 11, on speculation fuel demand will rebound.

The Organization of Petroleum Exporting Countries is “satisfied” with the current oil price, OPEC President Jose Maria Botelho de Vasconcelos said today in Beijing.

The current price is “good for all of us, the consumers and the producers,” de Vasconcelos said. The world economy has recovered and “this price is a balanced price for us,” he told reporters at the Global Think Tank Summit.

To contact the reporters on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: July 3, 2009 09:48 EDT