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Oil rises to near $107 ahead of key US jobs report

By Pablo Gorondi
Associated Press / March 9, 2012
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Oil prices rose slightly to near $107 a barrel Friday on positive news about Greece's debt crisis and ahead of a key U.S. employment report that will give an insight into the strength of the world's No. 1 economy.

By early afternoon in Europe, benchmark oil for April delivery was up 31 cents to $106.89 in electronic trading on the New York Mercantile Exchange. The contract rose 42 cents to settle at $106.58 per barrel in New York on Thursday.

In London, Brent crude was down 29 cents at $125.15 per barrel on the ICE Futures exchange.

Greece's debt swap, accepted by at least 83 percent of its private bondholders, should clear the way for the country's second international bailout, but analysts remained cautious.

"Greece successfully closed a bond swap offer aimed at reducing its debt, easing the threat of an immediate default, but prolonging Europe's struggle to find ways out of its debt dilemma," said a report from JBC Energy in Vienna.

The U.S. Labor Department is scheduled to announce February employment figures later Friday. Analysts expect the economy added about 210,000 jobs last month. Strong jobs growth in December and January has bolstered confidence that economic growth and demand for oil is improving.

Crude has jumped from $75 in October and $96 last month as the U.S. economic recovery gathers momentum and Europe's debt crisis shows signs of stabilizing.

"It's obvious that speculators are investing in the market and creating a push higher on prices, but the fact remains that we are still dealing with tight crude supply in the U.S.," said Carl Larry of Oil Opinions and Outlooks. "Oil prices, if they do come off, won't see much lower than $100."

"We're on the road to recovery and despite the move to more fuel efficient vehicles, it's not going to stop the increase in demand," he said.

Simmering tensions over Iran's nuclear program have kept crude near 10-month highs. On Thursday, an Israeli official said satellite images back Israel's contention that Iran is developing a nuclear weapon. Iran says its nuclear capabilities are for peaceful purposes.

The U.S. and Europe have imposed sanctions while Iran has threatened to halt crude tankers passing through the Persian Gulf's Strait of Hormuz

Any new aggressive rhetoric from Iran or others over the nuclear issue could easily push oil up by $2 to $3 a barrel, Energy consultant and trader Ritterbusch and Associates said in a report.

Speculation that the U.S. Federal Reserve is considering a third round of Treasury bond purchases, known as quantitative easing, has also boosted crude prices since it would weaken the dollar, making crude cheaper for holders of other currencies. The program would be designed to increase the money supply and lending to spur economic growth.

Underpinning concerns about global economic growth, the Organization of the Petroleum Exporting Countries kept its monthly forecast of world oil demand unchanged, saying it expected it to grow by 900,000 barrels a day this year.

OPEC said Friday that "the weak pace of growth in the OECD economies is negatively affecting oil demand."

While the U.S. economy has improved, Europe's debt crisis "along with higher oil prices has resulted in considerable uncertainties for future oil demand for the rest of the year," OPEC said.

In other energy trading, heating oil fell 0.80 cent to $3.2615 per gallon and gasoline futures fell 0.21 cent at $3.3119 per gallon. Natural gas advanced 2.7 cents to $2.299 per 1,000 cubic feet.

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Alex Kennedy in Singapore and George Jahn in Vienna contributed to this report.

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