Crude Prices End Lower Ahead of Labor Day Weekend

World oil prices eased on Friday, with shortened trading hours in New York and London, as traders squared positions ahead of a long U.S. weekend.

Traders said activity thinned after a volatile week which saw NYMEX crude briefly trade above $45 a barrel after a pipeline sabotage attack in Iraq on Thursday brought the focus sharply back on thinly stretched supply capacity.

U.S. light crude ended seven cents lower at $43.99 a barrel  on the New York Mercantile Exchange (search). London Brent futures settled 34 cents down to $41.23 per barrel. Gasoline futures ended higher, lifted by buying linked to spread trades, while heating oil closed lower in line with crude.

Crude prices on the NYMEX have recouped nearly $3 of losses after dropping about $8 on profit taking which followed the record $49.40 struck on Aug.20.

U.S. markets are closed on Monday for the Labor Day holiday. Electronic trading of NYMEX futures on the ACCESS system resumes on Monday at 7 p.m. EDT.

Thursday's attack on Iraq's northern oil export network, the fiercest yet, halted export pumping. Fire was still raging on the northern pipeline after it was attacked around 45 miles southwest of the oil center of Kirkuk.

Iraqi officials said the resulting fire would take two days to douse. Exports through the pipeline were halted until further notice.

U.S. traders were watching for news on the course of Hurricane Frances (search), which is expected to hit the east coast of Florida by Saturday evening. Although some operators of oil drilling rigs in the Gulf of Mexico had taken precautionary steps, analysts said they did not expect Frances to have a major impact on oil production in the U.S. gulf.

Weekly U.S. inventory data on Wednesday showing crude stocks in the world's leading oil consumer at their lowest in five months had already brought the market up sharply from six-week lows hit early in the week.

"The factors that we have seen driving this rally are still in place," said Michael Lewis, head of commodities research at Deutsche Bank in London.

The U.S. job market brightened modestly in August as employers added 144,000 workers to payrolls and weak job tallies for the two prior months were revised up, the Labor Department (search) said on Friday.

The U.S. August unemployment rate fell to 5.4 percent — the lowest since a matching 5.4 percent in October 2001 — from 5.5 percent in July.

"We need to see a real downward revision to global growth for the market to turn bearish," said Deutsche Bank's Lewis.

The OPEC (search) cartel has said it is doing all it can to control prices, which are being driven by soaring world demand and Middle East political instability.

A Reuters survey showed that cartel members, already pumping near 25-year highs, raised supply again in August as higher output from Saudi Arabia countered disruption from sabotage attacks in Iraq,

Total August output from the Organization of the Petroleum Exporting Countries rose 100,000 bpd to 29.6 million bpd, the survey of consultants, shippers, industry and OPEC sources showed.

A senior OPEC official based in the Middle East said on Wednesday the cartel's ministerial meeting on Sept. 15 might raise its formal oil output ceiling closer to its actual supply.