Oil rises as jobs data shows economic weakness
A pump jack dwarfs a house northwest of Calgary, in this Sept. 28, 2004 photo. THE CANADIAN PRESS/Jeff McIntosh
The price of oil jumped more than $1 a barrel Friday as the U.S. economy added fewer jobs than expected, fuelling speculation that the Federal Reserve will reconsider its plans to slow economic stimulus.
Benchmark West Texas Intermediate crude for February delivery gained $1.06 to US$92.72 on the New York Mercantile Exchange.
The world's largest economy added just 74,000 thousand jobs in December, the Labor Department said, while analysts had forecast the addition of 196,000 jobs. The unemployment rate fell from 7.0 per cent to 6.7 per cent, but it was mostly because of a drop in the number of people seeking work.
The Fed said in December it would start cutting back its bond purchasing program meant to spur economic growth by $10 billion a month. Outgoing Fed Chairman Ben Bernanke said that further cuts would depend on how many new jobs were added in coming months.
The stimulus program, which has also kept interest rates low, has helped raise oil prices by weakening the dollar and also by attracting investors to commodities in search of higher profits.
A weaker dollar usually boosts oil prices by making crude cheaper for traders using other currencies. On Friday, the euro was up at $1.3674 from $1.3604 late Thursday in New York.
Oil prices have been mostly falling since Dec. 27, when they topped US$100 for the first time in since October.
Brent crude, used to set prices for international varieties of crude, gained 65 cents to US$106.61 on the ICE Futures exchange in London.
In other energy futures trading on Nymex, wholesale gasoline added three cents to US$2.67 a U.S. gallon (3.79 litres), heating oil gained two cents to US$2.94 a gallon and natural gas was flat at US$4.05 per 1,000 cubic feet.
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