Oil's rally halted by US jobs data; WTI ends under $107

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Crude retreated on Friday, with U.S. oil settling a hair under $107, as U.S. jobs data fell short of expectations and tempered budding optimism underpinning demand expectations in the world's largest economy.

U.S. employers slowed their pace of hiring in July, with the number of jobs outside the farming sector increasing by 162,000, the Labor Department said. That was below the median forecast in a Reuters poll of 184,000. The disappointing number led many investors to sell out of positions after sharp gains in the previous two days.

U.S. crude, or West Texas Intermediate (WTI), settled down 95 cents at $106.94 a barrel, yet managed to post a modest gain on the week.

Brent crude fell 60 cents to under $109 a barrel, after reaching a high for the day of $110.09—its loftiest level since April 3. Brent also posted a weekly increase of more than 1 percent after two weeks of losses.

Oil has "put in a good run this week, but the steam has come out of the rally and traders are waiting for something extra to take it higher," Michael Hewson at CMC Markets said.

Strong U.S. manufacturing data from July, better European factory numbers and healthier-than-expected Chinese industrial data had led to sharp gains over the previous two sessions.

Middle East, West Africa crunch

Concern over supply disruptions in Iraq, Libya and Nigeria prevented heavier losses.

Libya's oil exports continued to flow at less than half normal rates on Friday as strikes and protests shut major oil terminals in the North African OPEC producer, triggering one of the worst disruptions in the past year.

Those outages helped trim OPEC output to a four-month low in July, a Reuters survey published on Wednesday showed.

OPEC output averaged 30.25 million barrels per day (bpd), down from 30.38 million bpd in June, the survey found.

OPEC supply looks set to tighten further. Seaborne oil exports from the producer group, excluding Angola and Ecuador, will fall by 490,000 bpd in the four weeks to Aug. 17, an analyst who estimates future shipments said on Thursday.

Iraq's production has come under pressure as Sunni insurgents target its northern pipeline, while technical problems curb output in the south.

Nigerian production has been blighted by oil theft, a factor that severely dented Royal Dutch Shell and Eni's second-quarter results.

Geopolitical risks were in focus after Iran's president-elect Hassan Rouhani said Israel's occupation of Palestinian lands was a "wound" on the Muslim world, in remarks shown on state television.

Iran's student news agency ISNA had earlier quoted Rouhani as saying: "The Zionist regime is a wound that has sat on the body of the Muslim world for years and needs to be removed."