* U.S. crude, Brent correlation breaks down
* Dollar index at one-month highs, euro falls vs dollar
* Technicals: U.S. crude could slip to $88 []
* Coming Up: U.S. December non-farm payrolls due 1330 GMT
(Adds quote, updates price)
By Zaida Espana
LONDON, Jan 7 (Reuters) - U.S. crude oil futures were firmer
above $89 a barrel on Friday as expectations U.S. jobs data
later in the day would show strong growth spurred hopes of a
more robust recovery in the world's top oil consumer.
In a rare market move, the price of Brent and U.S. crude
futures went in opposite directions.
U.S. crude <CLc1> futures were 67 cents up at $89.05 a
barrel by 1225 GMT, while February Brent crude contracts <LCOc1>
lost 41 cents to $94.11 a barrel, having tested highs of $96.17
a barrel during a rally this week on the back of index
rebalancing. []
Analysts said the price differential between Brent and U.S.
crude contracts -- also known as West Texas Intermediate (WTI)
-- remained exceptionally high and should tighten over the
coming weeks.
"It seems WTI prices have found a bottom and the huge price
differential between Brent and WTI, the highest since 2009,
looks excessive," Commerzbank analyst Carsten Fritsch said.
"The price differential should narrow, meaning Brent should
decline and WTI increase somewhat in the coming weeks."
Investors focused on the December reading of U.S. non-farm
payrolls due at 1330 GMT. A surprise increase in U.S. private
sector job creation in December raised hopes of stronger
non-farm payrolls figures, helping lift revised forecasts to
175,000 from 140,000 earlier. []
A positive reading would indicate a more sustained recovery,
and drive the dollar index <.DXY> to one-month highs.
[]
"Non-farm payrolls (are) likely to steal the limelight,"
Danske Bank analysts wrote in a note, "as markets will be eager
to see signs of job creation in the United States."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic previewing U.S. non-farm payrolls
http://r.reuters.com/quv94r
Graphic package on the Euro zone debt struggle
http://r.reuters.com/hyb65p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
BRENT, U.S. CRUDE DISCONNECT
U.S. crude prices have had a turbulent first week of the
year, seesawing in a range of almost $5 between 27-month highs
of $92.58 a barrel on Monday and lows of $88.38 on Thursday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of Brent/WTI spread:
http://link.reuters.com/taj25r
Graphic of Brent/WTI correlation:
http://link.reuters.com/vev25r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
A jump last week in crude stored at the Cushing, Oklahoma
hub, the delivery point for WTI, caused the U.S. benchmark grade
to trade at a discount of around $6.50 a barrel on Thursday.
"The driving factor for this decline was once again concerns
about the storage situation at the delivery point in Cushing,
with the discount to ICE Brent widening," JBC Energy consultants
said in a note on Friday.
On the Brent front, the price strength, robust trading
volumes and market structure have helped to lure some of the big
investment money that has typically favoured U.S. oil futures.
[]
Brent's premium over U.S. crude was at $5.29 per barrel by
1142 GMT, down slightly from a seven-month high on Thursday.
"We doubt that such a large spread will be sustainable,"
Credit Suisse analysts including Stefan Graber said. "With the
end of the winter season in February-March, energy prices may
face further downward pressure."
(Additional reporting by Alejandro Barbajosa and Florence Tan
in Singapore; editing by James Jukwey)
