LONDON: Oil prices jumped close to $106 dollars on Friday as investor sentiment was driven by the weak US dollar, tight energy supplies and more bad news on the US economy, analysts said.
On Friday, New York s main oil contract, light sweet crude for delivery in May, jumped $1.92 to $105.75 per barrel, after earlier touching $105.97.
London s Brent North Sea crude for May rallied $1.78 to $104.30.
Crude futures were higher as the dollar weakened, said Sucden analyst Nimit Khamar in London. The weak US currency tends to encourage demand for dollar-priced crude because it becomes cheaper for foreign buyers.
The US unit sank further against the euro on Friday after news that US employers cut a surprisingly large 80,000 jobs in March, the biggest decline in employment in five years, according to a government report.
The mounting job losses swelled the national unemployment rate to 5.1 percent last month compared with 4.8 percent in February.
The March nonfarm job losses marked the sharpest monthly decline since March 2003 and the start of the Iraq war, while the unemployment rate leapt to its highest level since September 2005.
In reaction, the euro rose as high as $1.5774, edging towards the record high of $1.5905 that was struck on March 17.
Friday s jobs report prompted many commodity fund investors to bet on fresh falls for the dollar, traders said.
Commodity funds are in many ways ahead of the dollar, said Alaron Trading analyst Phil Flynn.
The bad jobs number is basically reinforcing the idea that the (US) interest rates will come down.
He added that bad economic news is good for commodities in the near term.
This week, the oil market was gripped by volatility as traders weighed the likely slowing of global economic growth against concerns about tight energy supplies.
Many traders are concerned that slowing US growth could prompt a slowdown in demand because the United States is the world s biggest consumer of energy.
On Wednesday, however, prices soared after news that US gasoline (petrol) reserves tumbled 4.5 million barrels, compared with forecasts for a smaller drop of 2.5 million barrels.
The market is beginning to closely watch gasoline inventories ahead of the US peak demand season for motor fuel, which begins in May when Americans begin their summer vacations.
Traders shrugged off news that US crude inventories were up 7.4 million barrels in the week ending March 28, well above analyst consensus forecasts for a gain of 2.25 million barrels.
The market also tracked comments on Wednesday from US Federal Reserve chairman Ben Bernanke that the US economy could slide into a possible recession during the first half of 2008.
