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Oil rises to over $72 as job losses slow in the U.S.

Oil prices recouped earlier losses and climbed over $72 a barrel Friday after better-than-expected U.S. jobs data fueled hopes that the world's largest economy will soon be growing again.

By mid-afternoon in Europe, benchmark crude for September delivery was up 32 cents to $72.26 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday, the contract lost 3 cents to settle at $71.94.

The Labor Department reported that 247,000 jobs were lost in July, the lowest in a year, while the unemployment rate unexpectedly dipped to 9.4 percent, its first decline in 15 months.

Analysts had been expecting job losses of around 320,000 and an unemployment rate of 9.6 percent.

Traders have bid up crude from below $62 a barrel last week on expectations the economy could grow by the end of the year.

"Renewed investor hopes of an early recovery in the global economy have led to a sharp rebound in equities and oil prices," said a report from KBC Market Services in Britain.

Oil prices have held above $71 for the last few days despite an Energy Department report this week that showed crude supplies continue to rise, a sign demand remains weak.

In other Nymex trading, gasoline for September delivery fell 0.17 cent to $2.0590 a gallon and heating oil rose 0.13 cent to $1.9380. Natural gas for September delivery advanced 4.2 cents to $3.785 per 1,000 cubic feet.

In London, Brent prices rose 27 cents to $75.10 a barrel on the ICE Futures exchange.

JBC Energy in Vienna said a buildup of stocks in Cushing, Oklahoma, was behind the spread between the Nymex and Brent contracts, which remained around $3 in favor of Brent.

"Inventories have built by roughly 5 million barrels in the last six weeks, bringing the total level to around 33 million barrels," JBC said.

Stocks in Cushing feed a number of major refineries and is also where oil traded on Nymex is stored.

"This has caused (Nymex) to become disconnected from the global crude market which has seen the spreads of crudes priced off the North American benchmark shoot up," JBC said.

Associated Press writers Alex Kennedy in Singapore and Jeannine Aversa in Washington contributed to this report.