Oil eased on Friday as the market joined in the wait for monthly data from leading energy consumer the United States and Hurricane Earl posed a potential threat to the nation's east coast refineries.

U.S. crude for October dropped 38 cents to $74.64 a barrel by 0920 GMT, on track for its third weekly drop in four weeks, while ICE Brent declined 42 cents to $76.51.

U.S. inventory data on Wednesday showed fuel stocks had reached their highest since weekly records began in 1990.

Still the market managed to settle above $75 for the first time this week on Thursday after positive weekly U.S. jobs data drove expectations a double-dip recession could be avoided.

The link between the economy and demand for fuel has helped to keep oil prices closely tuned to other asset classes rather than to market fundamentals of supply and demand.

Traders say that could continue, keeping oil positively correlated to equity markets and negatively correlated to the U.S. dollar, which when weaker makes dollar-denominated commodities relatively cheap for holders of other currencies.

World stocks .MIWD00000PUS and the dollar against a basket of currencies .DXY were both close to flat early on Friday as virtually all asset classes awaited the U.S. data.

We're still heavily dominated by financials. There was quite a big build in U.S. inventories, but the market is showing resilience, said Tony Machacek of brokerage Bache Commodities.

Anything that will affect currencies, such as non-farm payrolls, will have a big effect on oil.

U.S. nonfarm payrolls probably fell for a third straight month in August, a Reuters survey showed, ahead of the monthly report scheduled for release at 1230 GMT.


The data arrives ahead of a long weekend as the U.S. Labor Day holiday falls on Monday, traditionally considered as the end of summer driving.

As Hurricane Earl swirled up the U.S. eastern coast, it posed a potential threat to some oil refineries. Although inventories are so high, any impact on refined product prices could be limited and the bigger impact might be to temporarily reduce demand for unrefined crude.

Bad weather could also curb driving demand.

On Thursday, the U.S. Energy Information said Hurricane Earl could affect 1.1 million barrels per day of U.S. operable refinery capacity on the Atlantic coast, or about 7 percent of the nation's total.

Earl has lost some force and its impact so far has been less than first thought.

Tropical Depression Gaston has also weakened. Forecasters said there was still a chance it could regenerate, but it was too early to tell whether it would head for the Gulf of Mexico where energy infrastructure is concentrated.

(Additional reporting by Alejandro Barbajosa in Singapore; editing by James Jukwey)