Oil prices jump

Oil prices jumped on Friday, as supportive US jobs data reinforced economic growth expectations and Libya's conflict and Middle East unrest kept supply threats in focus, pushing both Brent and US crude to their highest settlements since 2008. US nonfarm payrolls registered solid growth for a second month in March and the jobless rate hit a two-year low of 8.8 percent, helping fuel optimism about oil demand.
Geopolitical supply risks also had oil traders wary of being too short at the weekend, as Libya's undecided conflict and Middle East unrest persist and elections near for Opec-member Nigeria, brokers and analysts said. Oil prices also benefited from momentum after ending the first quarter posting double-digit quarterly gains. Brent crude for May rose $1.34 to settle at $118.70 a barrel, the highest close since August 2008 and up $3.11 for the week. It hit a May contract peak of $118.99 in post-settlement trading. Brent was up $3.11 for the week.
Brent's front-month 2-1/2-year high of $119.79 was struck on February 24. Brent has bounced back after falling below $108 in the aftermath of Japan's March 11 earthquake and tsunami. US crude rose $1.22 to settle at $107.94, pushing to $108.16 in post-settlement trading. Both the settlement and the intraday peak were the highest since September 2008. US crude took out the previous 2011 peak ahead of the jobs data.
Total US crude trading volume topped 500,000 lots, but remained below the 30-day average. Brent, at more than 453,000 lots traded, was only 8 percent below its 30-day average. "You have the jobs report, Libya has escalated, you've got Nigeria elections soon and Syria and the Middle East unrest and its the first day of the quarter so you have new money come in," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
"There is a tug of war going on with the dollar after the jobs report and it's Friday so there may be reluctance to go into the weekend short." The US jobs report showed nonfarm payrolls rose 216,000, more than the 190,000 expected and followed Thursday's report that weekly initial jobless benefit claims fell last week.
The US manufacturing sector grew at a marginally slower pace in March although a measure of prices rose to their highest level since July 2008, according to an industry report that some viewed as adding support for oil prices. "The trivial drop back in the ISM manufacturing index to 61.2 in March, from 61.4, still leaves it at a level consistent with GDP growth of more than 5 percent annualised," Paul Ashworth, chief US economist at Capital Economics in London said in a note.
He cautioned actual growth, "will be lower," because of the less robust services and weak housing sectors. The robust jobs data and Fed comments lifted US equities and the S&P 500 index, closely watched by many oil investors, broke above 1,332, doubling the 12-year low hit in March 2009.
Oil seesawed after the jobs report as the dollar strengthened and revived, if briefly, the view that the US Federal Reserve might curb its current ultra-loose monetary policy that tends to benefit riskier assets like commodities. The US dollar slipped against the euro, though the dollar index retained some gains. More losses versus the euro were seen likely in the near-term on expectations the European Central Bank will tighten monetary policy before the US Federal Reserve. New York Federal Reserve President William Dudley said it would be a surprise if the Fed did not complete its $600 billion in bond purchases, dampening belief that the positive jobs data would alter policy near term.