Oil tops $108 a barrel as jobless rate falls

[May 10, 2011]  NEW YORK (AP) -- Oil prices hit a new 30-month high on Friday after the world's top two oil consumers, the U.S. and China, issued positive economic reports that pointed to increased demand.

The U.S. said its economy added 216,000 new jobs last month and the unemployment rate dropped to 8.8 percent, a two-year low. Adding jobs tends to push oil prices higher since it implies that more workers will fill their tanks for the daily commute and businesses will step up demand for oil and gasoline.

In China, the government reported growing demand for autos and machinery as its manufacturing sector got stronger.

Benchmark crude for May delivery rose $1.22 to settle at $107.94 per barrel on the New York Mercantile Exchange. The price climbed as high as $108.05 per barrel at one point. Oil hasn't been that high since September 2008.

In London, Brent crude added $1.21 to settle at $118.41 per barrel on the ICE Futures exchange.

A stronger dollar kept prices from soaring earlier in the day, but it weakened by afternoon. Oil is traded in dollars and a stronger dollar makes crude more expensive for investors holding other currencies.

"The jobs number looked so good," analyst and trader Jim Ritterbusch said. "Then everyone looked at the dollar" and wondered how it would affect demand in China and other emerging markets. China is the world's second largest oil consumer behind the U.S.

"It's a very nervous market environment right now," Ritterbusch said.

Unrest continued across North Africa and the Middle East on Friday, keeping concerns about global supply interruptions on the front burner for many traders. As rebels fought with pro-Gadhafi forces in Libya, thousands of anti-government protesters rallied in Syria, Yemen and Jordan. Although Libya's exports of 1.6 million barrels a day -- about 2 percent of world supply -- have been halted, Saudi Arabia has stepped in to help cover the shortfall with increased production. Oil continues to flow from other OPEC nations in the region.

Meanwhile, gas pump prices rose by more than a penny on Friday to a national average of $3.619 per gallon, according to AAA, Wright Express and Oil Price Information Service. Gasoline prices are at the highest levels ever for this time of year. They've soared 23.2 cents in the last month and 81.6 cents since a year ago.

In other Nymex trading, heating oil added 3.27 cents to settle at $3.1452 per gallon and the gasoline gained 4.36 cents to settle at $3.1513 per gallon. Natural gas lost 2.7 cents to settle at $4.362 per 1,000 cubic feet.

[Associated Press; By CHRIS KAHN]

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