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Aug. 3, 2012, 3:24 p.m. EDT

Oil rallies nearly 5% after positive data

Rebound more than erases 2% loss in Thursday’s session

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By Claudia Assis and V. Phani Kumar, MarketWatch

SAN FRANCISCO (MarketWatch) — Crude-oil futures rallied nearly 5% Friday, spurred by optimism following a positive U.S. jobs report and as Wall Street traded sharply higher and the dollar lost some ground.

Optimism colored most market screens green across asset classes and across the globe, with natural-gas futures among the exceptions. Prices dropped further on Friday after a 7.9% loss in the previous session.

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Crude for September delivery /zigman2/quotes/209726679/delayed CLU22 +0.67% rose $4.27, or 4.9%, to settle at $91.40 a barrel on the New York Mercantile Exchange.

The settlement was the highest in two weeks.

Oil gained nearly 1.5% on the week.

Hopes for more oil demand stoked markets after the Labor Department reported the fastest pace of job growth since February.

Nonfarm payrolls expanded by 163,000 workers in July. That outpaced expectations of a rise around 100,000 on the month.

Further helping crude rebound, the dollar traded lower, losing some of its safe-haven luster. The ICE dollar index /zigman2/quotes/210598269/delayed DXY -0.22% , which compares the U.S. unit to a basket of six currencies, declined to 82.359 from 83.320 late Thursday.

Also Friday, the Institute for Supply Management reported a rise to 52.6% in July for its index gauging U.S. services activity, up from 52.1% in June and above analyst expectations. Read more about ISM services data.

Oil had dropped 2% on Thursday after the European Central Bank held interest rates steady and didn’t announce any immediate plans to restart purchases of Spanish and Italian bonds, upsetting investors who had been hoping for some action from the central bank to stem the region’s debt crisis.

Meanwhile, September natural-gas futures  fell 4 cents, or 1.5%, to end at $2.88 per million British thermal units.

Thursday’s drop of 7.9% was natural gas’s largest one-day percentage decline since April 2010.

Friday’s moves for crude and natural gas followed Energy Information Administration data showing a surprisingly sharp fall of 6.5 million barrels in U.S. crude inventories. Natural-gas supplies, however, rose 28 billion cubic feet in the week to July 27, higher than analyst estimates.

/zigman2/quotes/209726679/delayed CLU22 92.55, +0.62, +0.67%
Crude Vs Natural gas futures

The bigger-than-expected buildup for gas in storages last week “implies some weakening of the background supply/demand balance when adjusted for weather, and our suspicion is that some incremental power-sector demand has been met from coal rather than natural gas,” said Citigroup analyst Tim Evans in a note to clients.

Among other energy products, September gasoline  gained 6 cents, or 2.1%, to $2.93 a gallon, while September heating oil  rose 8 cents, or 3%, to $2.93 a gallon.

On the week, gasoline and heating oil rose more than 1%.

US : U.S.: Nymex
$ 92.55
+0.62 +0.67%
Volume: 57,610
Aug. 11, 2022 7:37a
US : U.S.: ICE Futures U.S.
-0.24 -0.22%
Volume: 0.00
Aug. 11, 2022 7:37a

Claudia Assis is a San Francisco-based reporter for MarketWatch. Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.

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