Crude Extends Rally On U.S. Payrolls, Geo-Political Tensions

Crude oil continues to extend Friday’s gains following the better-than-expected jobs report from the world’s biggest oil consumer, while tensions in the Middle East triggered fears of supply disruptions.

On Friday, Labor Department data indicated that the U.S. economy added 165 thousand jobs in April, above estimates of a 148 thousand increase, while the unemployment rate fell to 7.5% from 7.6%.

The unemployment rate fell to a four-year low, easing concerns about a sharp slowdown in the economy, pushing the Dow Jones and the S&P 500 to all-time closing highs on Friday as risk appetite advanced.

Israel carried out a second airstrike on a Syrian military facility over the weekend, aimed at stopping Lebanon`s Hezbollah from acquiring weapons coming from Iran, triggering supply disruption worries.

“Rising geopolitical worries have increased the risk premium on oil and the fear is that the Israeli attack is going to lead to a wider involvement of other nations in the Syrian conflict. That`s allowing oil to extend gains made on the back of strong jobs data in the United States”, said Victor Shum from HIS, Singapore.

- Crude oil is trading around the $96.08 a barrel level compared with the opening at $95.56, while the highest is at $97.10 and the lowest is at $95.56

- Brent is trading around $104.51 a barrel after rising 0.31% or $0.32

Gains may be limited today as worries over global demand growth persist. Overall economic outlook remains weak amid ample supplies, which may hold oil back from rising further.

Some investors may be determined to take profits following the latest surge in prices, unless the situation in the Middle East worsens. The weak economic data from China and Europe`s prolonged debt crisis may also weigh on prices.

Markets will focus this week on some earnings data, while on Monday the eurozone will release the services and composite PMI data. On Wednesday, China will release its trade balance while the Bank of England will meet Thursday to decide on its monetary policy.

- Natural gas is trading at $4.016 per cubic feet after falling 0.62%

- Gasoline is trading at $2.8291 a gallon, after rising 0.13%

- Heating oil is trading at $2.891 a gallon, after rising 0.23%

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