Future Crude Oil Rose, US Employment Growth

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Futures crude oil rose as the Labor Department said payrolls climbed by 103,000 workers in September and 57,000 in August. Oil climbed 4.8 percent this week, the most since March, as U.S. supplies fell and European central banks announced stimulus plans. Oil rose in New York, capping the biggest weekly gain in seven months, as larger-than-forecast U.S. jobs growth eased concern that the economy is slowing.

“There have been some really grave concerns that we’re heading into another recession and this will quell those worries until the next bad numbers come out,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.3 billion. “We were already having a really good week and these numbers were better than expected.”

Crude oil for November delivery rose 39 cents to settle at $82.98 a barrel on the New York Mercantile Exchange. Prices are down 9.2 percent this year.

Brent oil for November settlement increased 15 cents to end the session at $105.88 a barrel on the London-based ICE Futures Europe exchange. The European benchmark climbed 3 percent this week, the most since the week ending July 8.

The employment gain included the return to work of 45,000 striking telecommunications employees. The jobless rate held at 9.1 percent. Hours and earnings both increased, the report showed, and revisions to previous reports added a total of 99,000 jobs to payrolls in July and August.

“The biggest driver of oil markets is economic growth,” said Jason Schenker, the president of Prestige Economics, an energy advisory company in Austin, Texas. “People were increasingly fretful that we were entering another recession, and here is a piece of economic news that points to growth.”

Industrial output in Germany, Europe’s largest economy, fell less than forecast in August. Production dropped 1 percent from July, when it rose 3.9 percent, the Economy Ministry in Berlin said today. A 2 percent decline was expected, according to the median of 35 estimates in a Bloomberg News survey. Output is up 7.7 percent this year when adjusted for working days.

“The oil market is going to continue to move on the latest economic news,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re looking for signs of whether the economy will spiral back into recession or start to improve.”

The European Central Bank said yesterday it will bring back yearlong loans, giving banks access to unlimited cash through January 2013. The ECB will also resume purchases of covered bonds to encourage lending. The Bank of England announced yesterday its biggest stimulus since the recession.

German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin on Oct. 9 to discuss Greece’s debt problems as the nation edges closer to default.

Oil fell as much as 1.5 percent after Fitch Ratings reduced the ratings of Spain and Italy, bolstering concern the European debt crisis will worsen. Spain had its foreign and local currency long-term issuer default ratings cut to AA- from AA+, while Italy had the same set of ratings reduced to A+ from AA-, the company said in statements today.

“The Fitch downgrades of Spain and Italy are a reminder of the looming European debt crisis and how unsettled the markets are,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The jobs numbers are not as strong as initially thought.”

U.S. Stockpiles

U.S. crude oil inventories fell 4.68 million barrels to 336.3 million last week, the lowest level since January, according to an Energy Department report on Oct. 5. Gasoline supplies declined 1.14 million barrels to 213.7 million last week, the report showed.

“The big draw in supplies this week gave the market a boost,” Schenker said. “At the end of the day this is about supply and demand.”

Oil volume in electronic trading on the Nymex was 654,535 contracts as of 3:22 p.m. in New York. Volume totaled 836,382 contracts yesterday, the highest since Aug. 31 and 25 percent above than the average of the last three months. Open interest was 1.44 million contracts.