Oil Rises on Ukraine Fighting, US Job Growth
Brent crude futures rose by almost $1 to above $108 a barrel on Friday as fighting between Ukraine's army and a pro-Russian group in the east intensified, stoking fears of energy supply disruptions from the region.
The west has threatened more sanctions against Russia, which it believes is helping separatist groups. So far, U.S. and EU measures have not affected natural gas or oil flows.
Fears are also growing over potential Russian measures. Russia's energy minister said natural gas behemoth Gazprom would reduce exports to Ukraine in June if no prepayment was received this month.
June Brent crude rose 81 cents to $108.57 a barrel by 1253 GMT after settling on Thursday at its lowest close since April 11. U.S. crude was at $99.82 a barrel, up 40 cents.
Pro-Russian rebels shot down two Ukrainian helicopters on Friday, killing two crew, as troops tightened their siege of separatist-held Slaviansk in what Moscow called a "criminal" assault by Kiev that wrecked hopes of peace.
"The fact that the Ukrainian army has started to move is creating uncertainty ahead of the weekend," Olivier Jakob of consultancy Petromatrix in Zug, Switzerland said.
Russian President Vladimir Putin said the "punitive operation" mounted by Ukrainian forces had destroyed a peace plan agreed with Western powers two weeks ago.
A surprise surge in U.S. job growth helped buoy oil further, as it boosted investor confidence in the economic health of the world's largest oil consumer. Brent rallied by around 15-20 cents a barrel right after the data was released.
U.S. job growth increased at its fastest pace in more than two years in April and the unemployment rate dived to a 5-1/2 year low of 6.3 percent, suggesting a sharp rebound in economic activity early in the second quarter.
Nonfarm payrolls surged 288,000 last month, the Labor Department said on Friday. That was the largest gain since January 2012 and beat Wall Street's expectations for only a 210,000 increase.
Further gains were tempered by bearish oil demand signals out of the U.S. coupled with the impending return of more Libyan exports.
U.S. and European oil benchmarks tumbled mid-week after U.S. crude inventories hit a new record high last week on the back on strong output, the U.S. Energy Information Administration data showed.
In Libya, state-run National Oil Corp (NOC) said on Thursday that the Zueitina port was expected to load its first tanker of crude since reopening after nearly ten months due to protests.
(By Julia Payne, Additional reporting by Florence Tan in Singapore, Editing by William Hardy and Jason Neely)
