It was reported by Reuters that oil prices rose on
Friday in volatile trading after a disappointing U.S. August jobs report weakened
the dollar and bolstered expectations for stimulus from the U.S. Federal
Reserve, even while denting the outlook for petroleum demand.
Brent and U.S. crude futures posted small weekly
losses, after five straight weekly gains and a surge of more than 9 percent in
August.
U.S. nonfarm payrolls increased by only 96,000 last
month, the Labor Department said on Friday, below the forecasted rise of
125,000. While the unemployment rate dropped to 8.1 percent from 8.3 percent in
July, it was largely due to Americans giving up the search for employment.
Oil prices received a lift from expectations that the
jobs report increases the likelihood that the U.S. Federal Reserve's two-day
policy meeting next week will result in a third round of monetary stimulus, known
as quantitative easing or QE3.
Additional stimulus is expected to weaken the dollar,
which is usually supportive to dollar-denominated commodities like oil. The
dollar was broadly weaker on Friday, with the dollar index down nearly 1.0
percent, with the U.S. currency dropping to a near four-month low against the
euro.
Brent October crude rose 76 cents to settle at $114.25
a barrel, having swung between $112.34 and $114.65.
For the week, Brent slipped 32 cents.
U.S. October crude rose 89 cents to settle at $96.42 a
barrel, below the 200-day moving average of $96.62, after trading from $94.08
to $96.74 during the session.
For the week, U.S. crude lost only 5 cents.
Money managers raised their net long U.S. crude
futures and options positions in the week to Sept. 4, the Commodity Futures
Trading Commission (CFTC) said on Friday.
U.S. RBOB gasoline futures rose nearly 1 percent. Even
at the session high of $3.0541 a gallon, there was a significant gap still to
be closed to reach $3.1056, where the September contract expired and went off
the board last Friday.
U.S. heating oil futures rose, but only 0.2 percent.
"It was a decidedly negative report due to the
meager number of jobs created in August and the downward revision for the two
prior months," said John Kilduff, partner at Again Capital LLC in New
York.
"However, the data are clearly disappointing
enough to allow for a third round of quantitative easing, which lends support
to commodity prices and would enable a run at $100 per barrel for (U.S.)
crude," he added.
China's approval of a multibillion-dollar
infrastructure program helped push key industrial feedstock copper, another
dollar denominated commodity, to its highest price in nearly four months.
MULLING RESERVES RELEASE
The possibility that strategic oil reserves may be
released by the United States and other major oil consumer governments hemmed
in oil prices, after U.S. government officials met oil market experts on
Thursday as the White House considers the merits of another release.
While oil companies work to restore energy operations
on the U.S. Gulf Coast after Hurricane Isaac, the government's report on
Wednesday showed domestic crude oil stockpiles, excluding the SPR, fell 7.43
million barrels in the week to Aug. 31.
U.S. regulators said 36.35 percent of daily oil
production in U.S.-regulated areas of the Gulf of Mexico remained shut on
Friday, an improvement of 6.63 percentage points from Thursday.
MIDDLE EAST UNCERTAINTY
The threat persists that violence in the Middle East
could escalate and disrupt flows of oil from the region.
A blast outside a mosque in Syria's capital on Friday
killed five security personnel and wounded others.
Britain, France and Germany called on their European
Union partners on Friday to impose new sanctions against Iran over its nuclear
program.
The EU's embargo on Iranian crude is in its third
month.
Canada suspended diplomatic relations with Iran,
closing its embassy in Tehran and giving Iranian diplomats in Canada five days
to leave the country, Foreign Minister John Baird said, calling Iran the
biggest threat to global security.
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