Oil extends gains toward $110 after US jobs report
The price of oil rose toward $110 a barrel Friday as U.S. jobs data fueled expectations that the Federal Reserve will keep its economic stimulus measures in place longer than expected.
By early afternoon in Europe, the benchmark oil contract for October delivery was up $1.26 at $109.63 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.14 to close at $108.37 on Thursday.
According to the Labor Department, U.S. employers added 169,000 jobs in August, while July’s figure was corrected downward from an earlier estimate of 162,000 jobs to 104,000 jobs, the fewest in over a year. While the unemployment rate fell to 7.3 percent, the lowest in nearly five years, it was lower because more people stopped looking for work and were no longer counted as unemployed.
The slower hiring could lead the Fed to keep its bond-purchase program in place, rather than taper it off this month, as many investors had been expecting. The stimulus program is seen favoring investments in commodities like oil and in stocks as they could provide better returns than bonds.
Brent, the benchmark for international crudes, was up 48 cents to $115.74 per barrel on the ICE Futures exchange in London.
Brent has risen sharply recently due to fears of a U.S. intervention in Syria, even if the scale of the attack is now expected to be low. President Barack Obama won little backing at a summit this week in St. Petersburg, Russia, as the host, China and the European Union remained opposed to or at least skeptical about military action.
Still, Obama continued to push for support for an American strike against Syria, which analysts expected to underpin prices. Although Syria is not a major oil producer, it lies at the heart of a region that is a major exporter. Investors fear its destabilization could disrupt supplies.
“The march to an attack on Syria should push (Nymex) prices through resistance at $112, with prices topping out near $120 per barrel,” wrote Michael Fitzpatrick in the The Kilduff Report, a commodities analysis.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 2.68 cents to $2.8628 per gallon.
— Natural gas fell 3.7 cents to $3.538 per 1,000 cubic feet.
— Heating oil added 2.28 cents to $3.1625 per gallon.
Pamela Sampson in Bangkok and Christopher S. Rugaber in Washington contributed to this report.