Oil at seven-week high

Oil rose more than 1 per cent to hit a seven-week high on Friday after a report showed the United States lost fewer jobs than expected in February and on signals China will maintain its economic stimulus measures.
China.

US crude for April gained US$1.29 to settle at US$81.50, the highest settlement since January 11. Brent crude for April advanced US$1.35 to settle at US$79.89 a barrel.

US employers cut 36,000 jobs in February, leaving the unemployment rate unchanged at 9.7 per cent and helping to brighten economic sentiment. Analysts had expected non-farm payrolls to drop by 50,000.

"Given the outlook for persistent job growth in the coming months, this data is very supportive for energy prices," said John Kilduff, partner at Round Earth Capital in New York.

Equity markets in Europe and the United States were both up on the day after the jobs report.

The crude market also awaits the Commitments of Traders report from the US Commodities Futures Trading Commission due out late Friday to see if speculators extended net long positions again in the week to March 2.

Signals that China will maintain its economic stimulus measures supported prices earlier in the session. China is the world's second-largest oil consumer, after the United States.

China's Premier Wen Jiabao, in his annual address to the National People's Congress, said the country will continue an appropriately easy monetary stance and an active fiscal policy.

China escaped the worst of the global slump by ramping up credit, slashing interest rates and launching a 4 trillion yuan ($840 billion) infrastructure program in late 2008.

But in the past two months, China has restricted the amount of money that banks can lend by enforcing higher cash reserve ratios, aiming to prevent an over-heating of the economy.

Strait of Malacca

Oil prices also drew support from a risk of disruption to shipping in the Strait of Malacca, a narrow stretch of water between Malaysia and Sumatra.

The key shipping lane carries about 40 per cent of world trade, including an average of 15 million barrels of crude oil every day.

Singapore raised alert levels in the city-state and beefed up security at its airport and new casino resorts after a warning by its navy on Thursday of possible attacks on oil tankers in the Strait of Malacca.

New York crude has traded in a US$69 to US$84 range over the past few months amid uncertainty about the speed of the global economic recovery.

Some traders and analysts say currency movements could dominate the oil price as the strength of demand remains unclear during the recovery.

"Fundamentally, the oil market has yet to see some signs of improving demand from OECD states, while we are also concerned about the pretty much flat forward curve as investors still harbor worries over the cyclical recovery," VTB Capital analyst Andrey Kryuchenkov said.

Oil prices for contracts to be delivered in January 2012 are less than US$5 a barrel above the current oil price.

- Reuters