Oil price rises as jobless rate falls

Posted: April 1, 2011 in US News

CHRIS KAHN
Associated Press
April 1, 2011

NEW YORK (AP) — Oil prices reached two-and-a half-year highs on Friday, before falling back as a drop in the U.S. unemployment rate pushed the dollar higher.

Benchmark crude for May delivery was up 45 cents at $107.17 per barrel in morning trading on the New York Mercantile Exchange. The price rose as high as $107.84 per barrel, shortly after the Labor Department released its monthly jobs report. Oil hasn’t been that high since September, 2008.

The government said the U.S. economy added 216,000 new jobs last month and the unemployment rate dropped to 8.8 percent, a two-year low. Adding jobs often pushes oil prices higher since it implies that more workers will join the daily commute and increase demand for oil and gasoline. But a surge in the dollar against foreign currencies overrode that on Friday.

Oil, which is traded in dollars, tends to fall as the dollar rises and makes crude more expensive for investors holding other currencies. The U.S. Dollar Index, which measures the dollar against other major currencies, climbed almost 0.5 percent in morning trading.

“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.

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