Oil surges helped by robust US jobs report

New York (AFP) – Oil prices scored strong gains for a second day Friday, helped by a surprisingly robust jobs report in the United States, the world’s largest crude consumer.

US benchmark West Texas Intermediate (WTI) for March delivery advanced $ 1.21 (2.4 percent) to settle at $ 51.69 a barrel.

Brent North Sea crude for March, the European benchmark, closed at $ 57.80 a barrel, up $ 1.23 (2.2 percent) from Thursday’s closing level.

After several days of volatile trade in a market worried about ample supplies and slowing global economic growth, the two key futures contracts posted their best weekly performances since February 2011: WTI jumped 13.6 percent and Brent added 9.4 percent.

The closely watched US monthly jobs report came in much better than expected. The Labor Department reported the economy added 257,000 jobs in January and revised upward already healthy growth in the prior two months. The unemployment rate edged up to 5.7 percent from 5.6 percent, but that was in part because more people were actively seeking jobs.

Bob Yawger of Mizuho Securities said the market’s reaction was initially subdued and buying took a while to gain momentum.

But the jobs report was positive for traders because “it implies a certain degree of demand in the market,” he said.

Oil prices have plunged by about 50 percent from their June peaks, largely owing to a surge in global reserves boosted by robust US shale production.

Andy Lipow of Lipow Oil Associates said that the recent decline in the number of US drilling rigs was supporting prices somewhat but US supplies were still expected to increase.

“I think the market will make another run for the lower $ 40s, because inventories will continue to rise in the US as refiners are still in maintenance season” and oil imports are still robust, Lipow said.

“The market will remain under pressure,” he said. “The volatility is going to continue over the next several months.”

JPMorgan analysts, in a research report, forecast a “significant build” in global oil inventories in the first half of the year. “Thereafter, market fundamentals improve in (the second half of 2015) spurring a small recovery in price.”