Crude Gains as Jobs Data Raise Stimulus Hopes
U.S. crude futures rose Friday after bouncing between gains and losses as a weak report on the U.S. job market raised the possibility of additional central-bank stimulus.
Light, sweet crude for October delivery settled 89 cents, or 0.9%, higher at $96.42 a barrel on the New York Mercantile Exchange after rising as high as $96.74 earlier in the session. Brent crude on the ICE futures exchange traded 90 cents higher at $114.39 a barrel.
The U.S. economy added 96,000 jobs in August, the Labor Department said Friday, well below the gain of 125,000 jobs expected by economists. The unemployment rate, obtained in a separate survey of U.S. households, fell to 8.1% from 8.3% due to more people dropping out of the workforce.
Analysts said the market is now betting that the Federal Reserve may be prompted by weak data to move ahead with another round of stimulus, after hints that Fed Chairman Ben Bernanke was moving toward action in his speech last month in Jackson Hole, Wyo.
"It's nothing but hopes and expectations of stimulus," said Matt Smith, an analyst at Summit Energy. "We're back to this whole 'good is bad' scenario."
Oil prices swung between gains and losses immediately following the jobs report, at one point trading as low as $94.08 a barrel before rebounding.
"It's sort of perverse. The jobs numbers come in worse than expected, and the market rallied," said Andy Lebow, trader and broker at Jefferies Bache.
Crude-oil prices typically rise on signs of central-bank action as investors look to physical assets such as oil, copper or gold as protection against a weakening dollar. Prices rallied sharply following the Fed's second round of quantitative easing, or QE2, in late 2010.
Still, there are some concerns that any further gains could spark a release of strategic oil reserves, which traders and analysts say is likely capping any rallies for the time being.
"There's a lid on us here at $97, there's a bottom at $94, and there is a lot of play in between," said Carl Larry, an energy-trading adviser at Oil Outlooks and Opinions.
Front-month October reformulated gasoline blendstock, or RBOB, settled 2.86 cents higher at $3.0196 a gallon. October heating oil rose 0.64 cents to $3.1489 a gallon.
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