Oil rises as jobs data reinforces stimulus hopes

Fri Sep 7, 2012 4:58pm EDT
 
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices rose on Friday in volatile trading after a disappointing U.S. August jobs report weakened the dollar and bolstered expectations for stimulus from the U.S. Federal Reserve, even while denting the outlook for petroleum demand.

Brent and U.S. crude futures posted small weekly losses, after five straight weekly gains and a surge of more than 9 percent in August.

U.S. nonfarm payrolls increased by only 96,000 last month, the Labor Department said on Friday, below the forecasted rise of 125,000. While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, it was largely due to Americans giving up the search for employment.

Oil prices received a lift from expectations that the jobs report increases the likelihood that the U.S. Federal Reserve's two-day policy meeting next week will result in a third round of monetary stimulus, known as quantitative easing or QE3.

Additional stimulus is expected to weaken the dollar, which is usually supportive to dollar-denominated commodities like oil. The dollar was broadly weaker on Friday, with the dollar index .DXY down nearly 1.0 percent, with the U.S. currency dropping to a near four-month low against the euro. <USD/>

Brent October crude rose 76 cents to settle at $114.25 a barrel, having swung between $112.34 and $114.65.

For the week, Brent slipped 32 cents.

U.S. October crude rose 89 cents to settle at $96.42 a barrel, below the 200-day moving average of $96.62, after trading from $94.08 to $96.74 during the session.   Continued...

 
Gas pumps are seen at a petrol station in Prague May 10, 2012. REUTERS/David W Cerny