Oil prices up above one percent on strong US economic data, Libya supply risks

Oil prices climbed more than 1 percent on Friday as strong U.S. employment data tempered fears that global crude demand might weaken, and on expectations that an escalating conflict in Libya could tighten oil supplies.

Brent crude futures rose 72 cents to $70.12 a barrel, or 1.0 percent, by 1:45 p.m. EDT (1745 GMT), on track for its second straight weekly gain. Image source: Reuters

Oil prices climbed more than 1 percent on Friday as strong U.S. employment data tempered fears that global crude demand might weaken, and on expectations that an escalating conflict in Libya could tighten oil supplies. Brent crude futures rose 72 cents to $70.12 a barrel, or 1.0 percent, by 1:45 p.m. EDT (1745 GMT), on track for its second straight weekly gain. The session high of $70.41 was the highest since Nov. 12.

U.S. West Texas Intermediate (WTI) crude rose 97 cents, or 1.6 percent, to $63.07 a barrel, after hitting $63.18, the highest since Nov. 7. WTI was headed for its fifth consecutive weekly rise. "Oil prices are rallying in reaction to the U.S. employment report," said John Kilduff, a partner at Again Capital LLC in New York. "Signs of global economic slowdown had been a headwind for oil prices, but this morning`s report seemed to dispel at least some of those concerns."

The U.S. Labour Department report showed employment growth accelerated from a 17-month low in March. "This data is going to be enough to keep us above the $60 level for a least a couple of weeks," said Josh Graves, senior commodities strategist at RJO Futures in Chicago. Military action in Libya, which could disrupt supply from the OPEC member, also supported prices.

TRENDING NOW

Watch this Zee Business video here:

On Thursday, Eastern Libyan commander Khalifa Haftar ordered his troops to march on Tripoli, escalating a conflict with the internationally recognised government. Crude futures also received a boost from news of a potential slowdown in crude production out of Venezuela, as U.S. sanctions and energy blackouts hit the OPEC nation`s oil industry.

Venezuelan state-owned oil company PDVSA expects its crude upgraders to operate well below capacity this month, according to industry sources and documents seen by Reuters. Venezuela depends on the upgraders to convert the extra-heavy crude oil produced in the Orinoco Belt into exportable grades usable in overseas refineries.

U.S. energy companies this week increased the number of oil drilling rigs for first time in seven weeks, General Electric Co`s Baker Hughes energy services firm said in its report on Friday. Companies added 15 oil rigs in the week to April 5. While crude production has soared in the United States to a record 12.2 million barrels per day, according to government data released on Tuesday, some signs point to a near-term easing of growth.

Lingering concerns over U.S.-China trade relations limited oil price gains. The United States and China, the world`s two biggest oil consumers, could be close to ending their trade dispute, though some hurdles remain.

TAGS:

Brent Crude