Global oil prices rebounded sharply on Friday as traders digested strong non-farm payrolls data in top crude consumer the United States and tracked ongoing tensions over Iran.
Brent North Sea crude for delivery in September soared $2.68 to $108.58 per barrel in late afternoon London deals.
New York’s main contract, West Texas Intermediate (WTI) light sweet crude for September, jumped $3.89 to $91.02 a barrel.
The market spiked as data showed that the US economy created 163,000 jobs in July, beating forecasts for a gain of 100,000.
Markets fell on Thursday after the European Central Bank announced no new action on the eurozone debt crisis one day after the US Federal Reserve opted against more quantitative easing (QE) measures.
“July non-farm payrolls smashed expectations and justified why the Fed avoided being drawn in to QE3 this week. Investors are happy, for now,” said analyst Mike McCudden at online brokerage Interactive Investor.
“Crude oil prices rebounded from yesterday’s losses with fairly dramatic gains today as a result of the the weaker dollar and more upbeat sentiment,” added CMC Markets analyst Brenda Kelly.
A weaker US currency makes dollar-denominated oil more attractive to buyers using stronger currencies, tending to lift crude demand and prices.
Oil also won strong support this week from geopolitical tensions surrounding key producer Iran.
US President Barack Obama on Tuesday imposed new economic sanctions on Iran’s oil export sector and on a pair of Chinese and Iraqi banks accused of doing business with Tehran.
“Iranian sanctions helped build on recent increases in oil prices,” noted Inenco analyst Tom Pering.
“Supply concerns have really taken the forefront of investors’ minds as the effects of sanctions and geopolitical issues are beginning to take hold.
“Oil has returned to bullish territory and can be expected to trade in a range between $105-109 per barrel over the next week.”
Obama said the new measures highlighted US determination to force Tehran “to meet its international obligations” in nuclear negotiations.
The goal of the US sanctions, which are mirrored by similar measures by the European Union and other major economies, is to force Iran to negotiate a deal to open up its nuclear programme to international supervision.
Tehran insists it has a right to enrich uranium for civilian nuclear energy and research but Western powers fear it is attempting to stockpile enough highly-enriched fuel to have a “break-out capability” to build a bomb.