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NEW YORK, Oct 7, 2010 (AFP)
Oil prices dropped on Thursday after touching their highest level in five months a day earlier as traders took a pause ahead of a key US unemployment report.

New York’s main contract, light sweet crude for November delivery, dived 1.56 dollars to close at 81.67 dollars a barrel after briefly touching five-month highs on Wednesday.

In London, Brent North Sea crude for delivery in November shed 1.63 dollars to settle at 83.43 dollars.

Oil prices have been on the rise since the Federal Reserve meeting last month when it said it was prepared to inject cash into the economy if the US economic recovery falters. The September 21 Fed announcement has been pushing the dollar lower.

Friday’s key monthly unemployment report could be pivotal in the Fed’s decision to intervene.

“The culmination may be tomorrow’s big employment report as it will confirm or deny all of our deepest fears about the economy,” said analyst Phil Flynn of PFG Best.

On Wednesday, prices rose despite data showing an unexpected fall in US gasoline and distillate stockpiles last week, as the market appeared to focus on a larger-than-forecast jump in US crude inventories.

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