On the New York Mercantile Exchange, light sweet crude futures for delivery in October rose 0.85% Friday to settle at USD96.34 a barrel by close of trade.
Despite the day’s gains, New York-traded crude oil futures retreated 0.1% on the week, amid ongoing concerns over the global economic outlook and the impact on future oil demand prospects.
The Department of Labor said the U.S. economy added 96,000 jobs in August, well below expectations for 125,000, following a downwardly revised 141,000 in July.
The unemployment rate ticked down to 8.1% from 8.3%, as more jobless workers exited the labor force.
Oil traders have long been taking cues from the monthly jobs report, the most-closely followed indicator of U.S. employment.
The weaker-than-expected jobs data increased the chances that the Fed will implement further quantitative easing measures to strengthen the U.S. economic recovery, ahead of its upcoming policy meeting starting September 12.
Last week in a speech delivered in Jackson Hole, Wyoming, Fed chief Ben Bernanke said the persistently high rate of unemployment was a “grave concern” and reiterated that the central bank was ready to provide additional policy accommodation as needed to shore up growth.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
The weak jobs data sparked a sell-off in the greenback, which further boosted the appeal of dollar-denominated commodities.
The dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, lost more than 1% on Friday to settle the week at 80.35, the lowest since May 10.
Oil prices typically strengthen when the U.S. currency weakens as the dollar-priced commodity becomes cheaper for holders of other currencies.
The U.S. jobs report came one day after the European Central Bank announced details of its bond purchasing program aimed at stemming the debt crisis in the euro zone, dubbed Outright Monetary Transactions.
Speaking at the bank’s post-policy meeting press conference on Thursday, ECB President Mario Draghi said the plan would provide "a fully effective backstop" against market volatility.
Under the terms of the plan, the ECB would buy unlimited amounts of government bonds of up to three years in maturity, as long as the country in question is signed up to the OMT program and agrees to economic reforms in return for assistance.
The yield on Spanish 10-year bonds settled at 5.63% on Friday, falling below the 6% level for the first time since May, while the yield on Italian 10-year bonds fell to 5.05% by the close on Friday.
In the coming week, investors will be focusing on the outcome of the Federal Reserve’s policy meeting on Thursday, amid ongoing speculation over how close policymakers are to implementing more stimulus measures.
Market participants will also be eyeing Wednesday’s German court ruling on the constitutionality of the European Stability Mechanism.
Oil prices have rallied in recent weeks, climbing nearly 9% since the start of August, amid growing hopes policymakers in the U.S., Europe and China will introduce fresh easing measures to prop up their respective economies.
Renewed fears over escalating violence in Syria and lingering tensions between Iran and the West have also been supporting prices in recent weeks.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for October delivery settled at USD114.03 a barrel by close of trade on Friday. Prices touched a four-month high of USD116.60 a barrel on September 4.
The London-traded Brent contract shed 0.73% over the week, with the spread between the Brent and the crude contracts standing at USD17.69 a barrel by close of trade Friday.
Brent prices have been well-supported in recent months, rallying nearly 21% from the lows touched in June, amid growing concerns over tightening supplies from the North Sea region and following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
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