Oil fell on Friday after stronger than expected U.S. employment data boosted the weak U.S. dollar.

The U.S. economy added more jobs than expected in September and there were big upward revisions in job numbers for July and August.

The weak dollar, a big factor in driving up oil prices, jumped on the jobs data, which could reduce the need for further U.S. interest rate cuts to bolster the U.S. economy.

U.S. crude was 55 cents lower at $80.88 a barrel by 9:30 a.m. EDT after rallying $1.50 on Thursday, its first rise in a week. Brent crude fell 49 cents to $78.48.

Oil hit a record of $83.90 a barrel last month, boosted by U.S. dollar weakness, speculative inflows and concerns that oil's fundamental supply/demand balance is tightening ahead of peak winter demand.

The dollar has fallen to record lows against the euro based on expectations the U.S. Federal Reserve would have to cut interest rates again to shield the fragile U.S. economy from recession.

After the U.S. jobs data, the dollar rose sharply against the euro.

The September job numbers paint a clearly different picture, said Gary Thayer, chief economist at A.G. Edwards. Some traders may think that this will keep the Fed on the sidelines, but it doesn't take them out of the picture. Housing is still weak.

An economic slowdown in top oil consumer the United States could hit demand, but the market is more concerned about supply.

If the U.S. economy disappoints or goes into outright recession, that would reflect in a net reduction in expected demand, said Bob Greer, executive vice president at fund manager PIMCO.

However, because of the limited infrastructure in so many commodity markets, prices are not going to be affected so much by changes in demand, but more so by changes in supply, lack of supply and supply disruptions.

Oil has traded around the $80-mark for about three weeks despite OPEC's agreement on September 11 to boost output by 500,000 barrels per day (bpd) from November 1.

U.S. government figures on Wednesday that showed distillate supplies, including heating oil, dropped by 1.2 million barrels last week, about 9 percent below last year's average.

Taken together, the data painted a picture of tighter heating fuel supplies ahead of winter, although forecasters said they expected another warmer-than-average winter this year.

(Additional reporting by Angela Moon in Seoul)