Brent crude oil futures closed higher on Friday as a sharp fall in the US unemployment rate bode well for oil demand and as geopolitical tensions over Iran's nuclear program raised fears of supply disruptions. US crude seesawed near flat after giving up increases, while the dollar index recovered from earlier losses. Stronger refined product futures due to a refinery shutdown, especially gasoline, limited any losses.
Both crude contracts were on track to post weekly gains, after two straight weekly slumps. A hard-line Iranian cleric warned the United Nations and the European Union against siding with London after students and militia stormed British embassy compounds in Tehran earlier this week.
The EU and the United States tightened their sanctions on Thursday as fears over Tehran's nuclear program intensify, increasing concern over a possible disruption to oil flows from the second-largest Opec producer. "The Iranian situation is one of those things that could have a really bullish potential impact," said Tony Machacek, energy broker at Jefferies Bache in London.
ICE Brent January crude settled at $109.94 a barrel, rising 95 cents, or 0.87 percent. For the week, front-month Brent rose $3.54, or 3.33 percent, after two weeks of losses. It was Brent's best weekly performance since the week to October 14. NYMEX January crude settled at $100.96 a barrel, gaining 76 cents, or 0.76 percent. For the week, front-month crude gained $4.19 or 4.33 percent, after two straight weeks of losses. It was the best week since the week to November 11, when front-month crude gained $4.73, or 5.02 percent. US employment growth picked up speed in November and the jobless rate dropped to a 2-1/2-year low of 8.6 percent, bolstering the view that the economy was improving.
US nonfarm payrolls increased 120,000 last month, nearly matching expectations for a gain of 122,000, and the relative strength of the report was bolstered by upward revisions to the employment counts for September and October. "Oil prices are flagging after the US employment data due to exceedingly high expectations that came rushing into the market after the ADP survey earlier in the week showed a surprisingly strong number," said John Kilduff of hedge fund Again Capital LLC in New York. "There are some troubling signs of economic slowing in the rest of the world that look to be weighing on prices." US employers added 206,000 private-sector jobs in November, the ADP National Employment Report released on Wednesday said, well above expectations.