February 3, 2012 / 9:58 AM / 8 years ago

UPDATE 9-Oil up sharply on U.S. jobs surge, Iran

* Iranian leader threatens retaliation for oil embargo
    * Increase in U.S. nonfarm payrolls lifts oil prices
    * Coming up: API oil data 4:30 p.m. EST Tuesday

 (Recasts, updates prices to settlement)	
    By Robert Gibbons	
    NEW YORK, Feb 3 (Reuters) - Brent crude prices rose to
a near three-month peak on Friday in heavy volume
trading after a report showed the U.S. economy in January
created jobs at the fastest pace in nine months, fueling hopes
of stronger demand in the top petroleum-consuming nation.	
    Both Brent and U.S. crude extended gains late as the euro
recovered against the dollar and as oil investors covered short
positions ahead of the weekend, eyeing simmering tensions
between tensions with the West over Tehran's nuclear program.	
    Oil had initially rallied ahead of the jobs report after
Iran's supreme leader warned of retaliation over "threats of oil
embargo and war." 	
    "The euro came back and there were shorts being covered
ahead of the weekend with the situations in Iran and Greece
still out there," said Stephen Schork, president at the Schork
    Brent March crude rose $2.51 to settle at $114.58 a
barrel, a fourth straight rise and the highest settlement since
Nov. 8. For the week, Brent was up 2.8 percent.	
    U.S. crude futures, snapping a string of five straight lower
settlements, rose $1.48 to settlement $97.84 a barrel. But it
posted a 1.73 percent weekly loss.	
    Brent crude trading volume was 28 percent above the 30-day
average, with U.S. turnover 30 percent above its 30-day average
in post-settlement trading.	
    Brent/U.S. crude spread CL-LCO1=R was at $16.74 a barrel
based on Friday settlements, having briefly moved above its
200-day moving average just above $17, the biggest Brent premium
to its U.S. counterpart since the intraday high of $18.80
reached on Nov. 9.	
    Speculators cut their net long positions in U.S. crude oil
futures and options in the week to Jan. 31, data from the U.S.
Commodity Futures Trading Commission showed. 	
    U.S. gasoline and heating oil also rose as a
refinery problem in the Midwest and the cold snap in Europe
added support, along with the positive jobs report.	
    News late in the session that exports from Iraq's southern
hub Basra were halved by bad weather on Friday added support,
sources said. 	
    U.S. nonfarm payrolls jumped by 243,000 in January, more
than the expected gain of 150,000. The U.S. unemployment rate
dropped to a near three-year low of 8.3 percent. 	
    "The jobs number came much better than expected and gave the
(crude) market a nice pop, but the question will be whether this
is really a reflection of the entire economy," said Gene
McGillian, analyst at Tradition Energy in Stamford, Connecticut.	
    "We'll be watching to see if the rally in the Brent/WTI
spread starts to top out, because the fundamentals in the EIA
data (rising stockpiles, weak demand) are still there."	
    U.S. crude stockpiles have risen two consecutive weeks,
according to Energy Information Administration data released
Wednesday and gasoline demand continued to trend below year-ago
    Gasoline stockpiles also rose last week despite a drop in
refinery utilization and rise in refined products imports.	
    U.S. stocks rose and the jobs report helped propel the
Nasdaq index to an 11-year high and key industrial feedstock
copper jumped nearly 3 percent as the employment report
sparked optimism about economic growth across markets. 
    Crude's rise came even as the dollar index initially
strengthened on Friday, before pulling back. A stronger dollar
can pressure crude prices because it increases the cost of oil
for consumers using other currencies.	
 (Additional reporting by Gene Ramos in New York, Zaida Espana
in London and Manash Goswami in Singapore; editing by Jim
Marshall and Lisa Shumaker)
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