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Oil rises on strong U.S. jobs data; Fed easing weighs

Source: Reuters - Fri, 6 Dec 2013 04:10 PM
Author: Reuters
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(Adds analyst quote, updates prices, changes byline, changes dateline to New York)

By Jeanine Prezioso

NEW YORK, Dec 6 (Reuters) - Oil rose on Friday, supported by expectations of increased demand after the government reported the jobless rate fell to a five-year low in the United States, the world's top oil consumer, adding to a week's worth of strong economic data.

Gains were curbed by speculation the positive data would push up the date that the U.S. Federal Reserve begins unwinding its bond-buying program, which could reduce support for riskier assets such as oil and other commodities.

Nonfarm payrolls increased by 203,000 jobs last month and the unemployment rate fell to its lowest since November 2008, the U.S. Labor Department said on Friday.

The November data took into account federal workers who were counted as jobless in October returning to work after a 16-day partial shutdown of the government.

U.S. crude initially fell on the jobs report, then rose. It last traded up 24 cents at $97.62 a barrel at 10:42 a.m. EST (1542 GMT). Brent rose by more than $1 per barrel to a session high of $112.06 before paring gains to $111.54.

Brent's $1 rise fuelled U.S. RBOB gasoline prices, which jumped to a two-week high of $2.7545 per gallon. The contract last traded more than 2 cents higher at $2.7342.

The choppy action reflected that the market was "grappling" with concerns the Fed is going to remove monetary support after the positive data, even though it means overall stronger oil demand, said John Kilduff, partner at Again Capital in New York.

After a week of strong gains, oil bulls were "struggling" to push the market to the 200-day moving average at $98.51, Kilduff added.

U.S. oil's rally over the past week has caused Brent's premium to the U.S. benchmark to narrow by almost $5 to $13.57 per barrel after the spread last week reached its highest since March.

Weather-related production outages also supported prices, analysts said.

North Sea oil producers cut output and moved staff from some platforms as a major storm blasted toward mainland Europe in what meteorologists warned could be the worst weather to hit the continent in years.

Cold weather also dented oil and gas production in the United States and could further crimp output in top crude-producing states, such as Texas and North Dakota.

The U.S. Commerce Department on Thursday revised third-quarter gross domestic product growth sharply upward. Weak demand and a pile-up in business inventories, however, buoyed the case for the Fed to keep buying bonds for now. (Additional reporting by Peg Mackey in London and Jacob Gronholt-Pedersen in Singapore; Editing by William Hardy, Dale Hudson and Jeffrey Benkoe)

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