Brent crude rose on Friday on better-than-expected US jobs data and a pipeline fire in Iran, but retreated from highs and seesawed with Wall Street as investors remained wary of a global economic slowdown. Brent gained and US crude bounced into positive territory when sources close to the matter said the European Central Bank was ready to buy Italian bonds if Italy commits to accelerate economic reforms, lifting the euro and weakening the dollar.
A weaker dollar can lift dollar-denominated commodities. US stocks turned positive after midday in New York, having initially shrugged off jobs data viewed as insufficient to alleviate concerns about slower US growth and Europe's debt woes. "A quick glance at the latest jobs report shows it is positive, better than expected. But whether the market will be able to stem its downslide after the recent stream of negative economic data remains to be seen," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
ICE Brent crude for September rose $1.60 to $108.85 a barrel by 1:46 pm EDT (1746 GMT), after briefly turning lower near midday and having jumped to $110.26 in reaction to the jobs data. US September crude seesawed near flat and was unchanged at $86.63 a barrel, well off its $88.32 peak reached after the jobs report but having bounced off a session trough of $82.87, the lowest since November 26, 2010. It slid almost 6 percent on Thursday.
The Reuters-Jefferies CRB index, a global commodities benchmark, fell intraday to a seven-month low as raw materials markets saw one of their biggest sell-offs since the financial crisis. European shares posted their biggest weekly decline in nearly three years on worries about weak global growth and fears that the eurozone debt crisis could engulf Italy and Spain. The US jobs data curbed the day's losses.
Brent and US oil rallied immediately after the Labour Department said nonfarm payrolls increased by 117,000 last month, above market expectations, as private employers stepped up hiring. Brent had dropped nearly $6 in the previous session on concern oil demand will slip as US growth falters and Europe's debt crisis worsens. In early trade on Friday, it fell as low as $104.30, its lowest since June 27.
News of an Iranian pipeline explosion that shut flows of up to 40,000 barrels per day lifted oil prices from early lows. But Iran, the second-largest Opec producer after Saudi Arabia, later said it was pumping oil at full capacity. Iran also said Opec oil ministers will meet if prices continue to fall.
"If the downward oil price trend continues the ministers of Opec will hold talks and negotiate," Iran's Opec governor, Mohammad Ali Khatibi, said on the Oil Ministry news website SHANA. In other price-supportive news, TransCanada Corp said its Keystone pipeline bringing crude from Canada to the United States will be shut until late this weekend for scheduled maintenance. US gasoline and heating oil futures rose on Brent's rebound and helped by news that a fire had shut Valero Energy Corp's 180,000-bpd Memphis, Tennessee refinery.
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