Brent swells to $104 on US outlook

London: Brent crude rose above $104 a barrel on Friday after better-than-expected job growth in top oil consumer the United States raised the prospect of stronger demand.

World oil prices held firm on Friday as investors locked in profits after a strong rally following the European Central Bank’s decision to cut interest rates, and at the end of a rollercoaster week that was mostly driven by global economic data, analysts said.

Oil a day earlier was boosted by the European Central Bank (ECB) after it cut interest rates to record lows, spurring investor appetite for riskier assets.

Analysts said the positive employment outlook in the United States could prove more bullish for the dollar than for oil.

The dollar rose over 1 per cent against the yen and US stock index futures pointed to a sharp rise on Wall Street.

“A stronger dollar could put a bit of pressure on oil,” said Olivier Jakob of Petromatrix in Zug, Switzerland.

“There’s unlikely to be a sustained rally. Especially when the focus returns to the high level of oil stocks.”

Brent crude was up $1.40 at $104.25 a barrel by 1305 GMT, while US crude was up $1.27 at $95.26.

Despite the bullish US jobs data, weak manufacturing activity in the United States and China is still clouding the outlook for oil demand from the top two consumers.

“I think the PMIs which we’ve seen this week still remind us that in China we need to see further evidence of stabilisation. And in the United States we want to see signs that are a little less stop-start,” said Ben Taylor of Sydney-based CMC Markets.

Crude futures had spiked nearly $3.00 higher on Thursday, in the wake of the ECB’s interest rate cut and positive US economic data, traders said. The jump in prices reversed Wednesday’s sharp losses that were tied to glum economic figures.

“Crude posted quite a strong rally after the ECB rate cut. We’re seeing some profit-taking ahead of the weekend,” Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore, said.

“The recent rebound in crude oil prices is a result of more confidence in the global economy as ECB and Fed decisions to stimulate growth could bring a boost in oil demand for the second half of 2013,” noted Sucden brokers analyst Myrto Sokou.

“Today all eyes remain on the US non-farm payroll data that will set the tone for today’s trading activity,” she added.

Also helping was the weekly US jobless claims report, which came in much better than expected, suggesting some tightness in the jobs market.