Oil falls nearly 4 percent on U.S. data

NEW YORK (Reuters) - Swelling motor fuel stocks and a far-bigger-than-expected rise in U.S. unemployment drove oil down nearly four percent on Thursday to below $67 a barrel.

In the latest signal the economy of the world's biggest energy consumer was still struggling with a deep recession, data on Thursday showed U.S. employers had cut 467,000 jobs in June and the unemployment rate had risen to 9.5 percent, the highest in nearly 26 years.

U.S. crude settled $2.58 lower to $66.73 a barrel. London Brent crude dropped $2.14 to $66.65.

"It shows an economy still in distress that can only be echoed in earnings reports after the holidays," said Mike Fitzpatrick, vice president at MF Global in New York.

Wednesday's U.S. government data that showed gasoline stockpiles in the United States rose by 2.3 million barrels last week also showed the economy was still week, analysts said.

Distillates, including diesel, also rose by 2.9 million barrels, although crude stocks dropped by 3.7 million barrels.

Traders viewed the increase in motor fuel ahead of the U.S. July 4 Independence Day holiday -- which traditionally marks the peak of the U.S. summer driving season -- as a symptom of continued demand weakness.

Some analysts are still relatively bullish, however, and say the Organisation of the Petroleum Exporting Countries has been very successful in stabilizing the market.

Oil has rallied from a low of $32.40 in December last year to highs above $70 a barrel in June, although it is only around half last July's record of more than $147.