Oil futures ended slightly higher Friday after a report said the U.S. unemployment rate fell under 9%, fueling optimism over the economic recovery in the world's largest oil consumer.
Light, sweet crude for January delivery settled up 76 cents, or 0.8%, to $100.96 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange recently traded up $1.25, or 1.2%, to $110.24 a barrel.
Futures were bolstered by the Labor Department's nonfarm payrolls report--the most closely watched barometer of U.S. employment--which said payrolls rose 120,000 last month. The unemployment rate, obtained from a separate survey, fell to 8.6% from 9% the previous month, marking the first time the jobless rate had fallen below 9% since March 2009.
"I don't think it would be out of the ordinary to see that thing under 8% in the next three months," said Carl Larry, president of the trading advisory firm Oil Outlook and Opinions.
Oil traders have been closely watching the pace of the U.S. recovery because economic activity is closely correlated with demand for crude. The stubbornly high unemployment rate in the U.S. has been a drag on demand for gasoline this year, as fewer people drive to work or take vacations.
Friday's data is offering hope that unemployment is on a downward course. Crude futures rose as high as $101.56 a barrel shortly after the report's release. But a strengthening dollar eroded those gains as the trading session unfolded. A stronger greenback tends to curb the price of oil by making the dollar-denominated commodity more expensive for holders of other currencies.
At one point, prices even dipped below $100 a barrel, falling as low as $99.76, before snapping back later in the session.
Several market participants noted the jobs report, though positive overall, was widely expected. Traders may already be taking the improving U.S. economic outlook into account, they said.
"Today's employment number was a non-event," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "The actual number was within expectations and the 4% reduction in [unemployment] was not so meaningful since it was mostly driven by people dropping out of the job market."
Economists' median expectation for November was that payrolls grew by 125,000 last month and the unemployment rate stayed at 9%.
Nymex crude prices gained 3.7% this week, boosted by a host of factors. Concerns that additional sanctions against Iran over its nuclear program are feeding worries about supply. Signs that Europe is taking steps toward resolving its sovereign debt crisis are offering hope that the euro-zone economy could be on the mend.
Traders will shift their attention next week to a meeting between German Chancellor Angela Merkel and French President Nicholas Sarkozy on Monday. The two leaders will prepare a package of proposals ahead of a Dec. 9 summit of European leaders.
Front-month January reformulated gasoline blendstock, or RBOB, settled up 5.83 cents, or 2.3%, to $2.6162 a gallon. January heating oil settled up 2.05 cents, or 0.7%, to $2.99 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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