Brent Gets Lift From Better Than Expected US Jobs Report

Oil's Next Stop $100: Pro

Brent crude rose more than $1 to surpass $104 a barrel on Friday, for a second day of gains, after better-than-expected job growth in the United States raised the prospect of stronger demand in the world's top oil consumer.

U.S. employment rose more than expected in April, pushing the unemployment rate to a four-year low of 7.5 percent, which could help ease concerns about a sharp slowdown in the economy.

Brent crude settled up $1.34 at $104.19 a barrel after getting up to nearly $105 and its highest since April 11.
U.S. crude for June delivery settled up $1.62 at $95.61, its highest close since April 3.

Both benchmarks gained more than $2 in earlier trading.

U.S. equity markets climbed to intraday record highs, providing support to oil prices.

"I think the tone for the day was set by the employment numbers, and certainly the new highs in the S&P 500 helped to generate a wider risk-on trade flow," said Tim Evans, an energy analyst with Citi Futures Perspective.

He said bullish traders were vulnerable to a swing in market sentiment, since U.S. crude stocks are at an all-time high and he has not seen sustained evidence of rising demand.

U.S. crude has outperformed Brent crude for the second straight day, a pattern that Evans called "ironic" given record-high inventories.

"What we don't have is any direct fundamentals that are actually supportive for U.S. crude oil. Sentiment can swing abruptly, and when these traders look to take profit, it's going to be in a market that lacks any physical tightness," Evans said.

The U.S. employment report outweighed bearish data showing weak manufacturing activity in the United States and China. The U.S. Commerce Department on Friday said orders for manufactured goods dropped 4 percent in March.

Weak manufacturing news from China, the world's No. 2 oil consumer, is still clouding the outlook for global demand.

"I think the PMIs (purchasing manager indexes) which we've seen this week still remind us that in China we need to see further evidence of stabilization. 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.

Oil prices rose sharply on Thursday after the European Central Bank cut interest rates to record lows, spurring investor appetite for riskier assets.