Oil price rises above $95 ahead of US jobs report

June 7, 2013 - 8:34 AM

The price of oil made modest gains Friday ahead of the release of a key U.S. jobs report that traders will examine for clues to the health of the U.S. economy.

By early afternoon in Europe, benchmark oil for July delivery was up 47 cents to $95.23 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.02 to finish at $94.76 a barrel Thursday.

The U.S. Labor Department will release its employment report for May later Friday, with analysts expecting an increase of 165,000 jobs. The figures will be watched closely as they could affect how quickly the Federal Reserve starts reining in its monetary policy.

Oil prices were also being supported by a weaker dollar and a bigger-than-expected drop in crude inventories reported by the U.S. Energy Department and the American Petroleum Institute for the week ending May 31.

"The huge 6.2 million barrel drawdown of crude stocks ... is the largest draw down for crude inventories since the end of last year," said a report from Sucden Financial Research in London. The large drop in crude stockpiles "indicates the stronger demand outlook for the summer driving season as refining activity improves."

The dollar was down nearly 2 percent against the Japanese yen and was also lower against the euro and the Swiss franc. A softer dollar makes commodities like oil priced in dollars cheaper and a more attractive investment for investors using other currencies.

Meanwhile, Brent crude, a benchmark for many international oil varieties, was up 56 cents to $104.17 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

— Wholesale gasoline rose 0.94 cent to $2.8603 a gallon.

— Heating oil added 1.57 cents to $2.8871 per gallon.

— Natural gas gained 2.1 cents to $3.848 per 1,000 cubic feet.

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Pamela Sampson in Bangkok contributed to this report.