MW: Oil rises to extend weekly gains after jobs data
NEW YORK (MarketWatch) -- Crude-oil futures erased earlier losses Friday, climbing to extend their weekly gains after the government reported a surprising improvement in the U.S. jobs market, raising hopes for an economic recovery and rising demand for oil.
The Labor Department reported the U.S. labor market improved markedly in November, with the unemployment rate falling back to 10% and job losses shrinking to the lowest level in nearly two years.
After the report, crude oil for January delivery rose 30 cents, or 0.4%, to $76.76 a barrel in electronic trading on Globex. Oil was down nearly 1% before the data. Crude is set to end the week up less than 1%.
The United States Oil Fund (USO 38.99, +0.47, +1.22%) , the biggest oil exchange-traded fund, is also set to end the week up slightly.
Nonfarm payrolls dropped by a seasonally adjusted 11,000 in November, the fewest since December 2007, the Labor Department said. Payroll losses in September and October were revised lower by a total of 159,000.
The report was much better than expected by economists surveyed by MarketWatch, who were looking for 100,000 fewer jobs and a steady 10.2% unemployment rate.
The data is important for the oil market because good economic news usually boost oil prices, since they raise hopes of a swift economic recovery as well as a rebound in energy demand.
"The jobs number renewed hopes that energy demand could recover from current dismal levels," said Phil Flynn, vice president at futures trading and research firm PFG BEST Research.
Gains in crude, however, were limited by the U.S. dollar, which rebounded strongly following the jobs data. The dollar index (DXY 74.91, +0.28, +0.37%) was last up 0.6% to 75.052.
Strength in the greenback often adds pressures on dollar-denominated commodities prices. Gold prices fell more than 2%.
Oil should still be trading "within the $75-$82 trading range, and it remains to be seen whether the bottom will be taken out this time around," said Edward Meir, an analyst at MF Global, in a note to clients.
Investment demand for commodities has been very strong in recent weeks.
Commodity-sector funds, tracked by EPFR Global, posted inflows of over $1 billion for the third straight week in early December.
During the week ended Dec. 2, this fund group absorbed $1.13 billion, taking year-to-date inflows to over $24 billion, EPFR Global said.
Also in energy trading, January gasoline rose 0.5% to $2.0033 a gallon, and January heating oil gained 0.3% to $2.056 a gallon. January natural gas advanced 2.3% to $4.562 per million British thermal units.
