Oil Ends Up at $106.23 on Weak Dollar
Oil prices rose more than 2 percent Friday as weakness in the U.S. dollar following a batch of soft jobs data outweighed fears of a demand slowdown in the world's biggest energy consumer.
News of a fire at an Exxon Mobil refinery in Los Angeles supported the gains, sparking fears over gasoline supply heading into the summer driving season.
U.S. light, sweet crude settled up $2.40 to $106.23 a barrel.
London Brent crude gained $2.38 to $104.90.
The dollar dropped versus the euro after a U.S. government report showed employers slashed payrolls a third straight month in March, cutting 80,000 jobs. It was the biggest monthly job decline in five years.
"The payrolls data was initially supportive as the dollar weakened," said Eric Wittenauer, energy analyst at Wachovia Securities.
A weak U.S. dollar can support nominal prices for all commodities denominated in the currency, in part because it boosts non-U.S. purchasing power and draws money from investors seeking a hedge against inflation.
Adding support to the rally, Exxon Mobil reported a major fire at its Los Angeles refinery that shut down a hydrotreating unit at the plant.
The problem at the refinery triggered concern over gasoline supplies heading into vacation season, after low domestic production prompted nationwide stockpiles of the key motor fuel to fall for the third week in a row.
But oil's gains remained tempered by mounting concerns that an economic slowdown in the United States will significantly reduce overall demand for energy -- a factor that has pulled crude back from last month's record $110.80.
"Crude oil has already had an amazing run that has realized a great deal of its upward potential, leaving it at an increased risk of a substantial decline," Citigroup analyst Tim Evans said in a report.
Data from the U.S. Energy Information Administration showed average implied oil demand in the United States over the first 13 weeks of the year down more than 479,000 barrels per day (bpd) from a year ago.