LONDON: Oil posted gains on Friday, briefly touching a six-week high as markets rose on the release of better-than-expected job-loss numbers out of the United States. By 1300 GMT US light crude for September delivery rose 64 cents a barrel to $72.58 after briefly touching a high as $72.84. London Brent crude rose 48 cents to $75.31. US employers cut 247,000 jobs in July, far less than expected and the least in any month since last August, according to a government report on Friday providing the clearest evidence yet that the world s largest economy was turning around. Analysts said the US jobs data was a mixed bag for crude traders, and that foreign exchange markets were more likely to play a role in commodity pricing on Friday. On the one hand it was good for fundamentals for people to be working and able to buy things; but it could mean Europe will be seen as the lagging market and get people to short the euro and a stronger dollar longer term, said senior analyst Chris Jarvis at Caprock Risk Management in New Hampshire. Global commodities are priced in the U.S. currency which erased losses following the US jobs report, trading at session highs versus the euro and up more than 1 percent against the yen. In early trade crude fell more than $1 as markets absorbed Thursday s shock decision by the Bank of England to boost Britain s recession-hit economy by expanding its quantitative easing plan to £175 billion from £125 billion. Oil prices were on course for their fourth straight up week as economic confidence has grown, boosting investor appetite for riskier assets and knocking back the dollar. For much of this year, oil prices have correlated closely with stock markets, and Friday s initial bearishness coincided with weaker equities as investors grew cautious before the US non-farm payrolls data. The market still looks fairly resilient, analysts at MF Global wrote in their daily energy report. However, at this stage, much rides on what US equities will do over the next few weeks, as they have indisputably been the upside driver for most commodity complexes. Looking forward, oil analysts have stood back from the past four weeks of crude bullishness to express wariness over bearish fundamentals, as US oil inventories have stayed high and global demand remained weak. In addition to swollen inventories on land, oil stocks have again begun to build at sea. The world s biggest independent oil tanker shipping group Frontline on Thursday said around 50 very large crude carriers (VLCCs) were storing nearly 100 million barrels of crude at sea, particularly in the US Gulf and Europe. Industry sources on Friday also told Reuters Morgan Stanley was expected to store around 2.6 million barrels of gas oil on ships off Europe. We continue to see sizeable risks to the downside for crude in the near-term as weaker demand for crude will add to already weak fundamentals for the complex, said JP Morgan analysts in a weekly oil report. That said, our longer-term outlook is considerably more positive as the expected boost in demand for the second half of the year will begin to cut back on commercial inventories around the world. Oil now costs more than twice what it did in December when it plunged to below $33, though it is still less than half last July s record above $147. -Additional reporting by Maryelle Demongeot in Singapore and Robert Gibbons in New York.
