Oil rallies on US jobs report

February 04, 2012 | 08:56

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World oil prices surged Friday after unexpectedly good jobs data signaled the US economy was growing more strongly than believed.

World oil prices surged Friday after unexpectedly good jobs data signaled the US economy was growing more strongly than believed. (AFP Photo/Fred Tanneau)

New York's main contract, West Texas Intermediate (WTI) crude for delivery in March, rose $1.48 to $97.84 a barrel.

Brent North Sea crude for March delivery rallied $2.51 to $114.58 a barrel in London.

The US economy added a net 234,000 jobs last month, pushing the unemployment rate down to 8.3 per cent, its lowest level in nearly three years, government data showed Friday.

The news was underpinned by new figures on the key services sector of the economy, which picked up activity in January also at a pace much faster than expected.

With the United States the world's biggest crude-consuming nation, stronger growth likely means an uptick in energy consumption that would be a positive for prices.

"The economic data points continue to come on strong and underpin prices," said John Kilduff of Again Capital.

Also supporting prices was heightened tensions between Sudan and South Sudan which has forced a slowdown of production in South Sudan.

Adding to the mix was a Washington Post report that US Defense Secretary Leon Panetta believes there is a "strong possibility" that Israel will strike Iran's nuclear installations this spring.

Asked about the report later, Panetta neither confirmed nor denied it.

Even so, Phil Flynn of PFG Best said the talk of more tensions with Iran over its alleged nuclear weapons program appeared to have little impact on trade.

"The oil market is getting less rattled by the headlines surrounding Iran," he said.

"Iranian threats to shut down the Strait of Hormuz or cut off supply to Europe in a preemptive strike, have been like the old story of 'The Little Boy Who Cried Wolf.'"

AFP

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