* Fed Chairman Bernanke more hopeful recovery sustainable
* US unemployment rate dips, jobs rise less than expected
* Coming up: CFTC positions data at 3:30 p.m. EST Friday
(Recasts, updates prices and market activity, changes byline and
moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Jan 7 (Reuters) - U.S. crude oil futures rose in
volatile trade on Friday as Federal Reserve Chairman Ben Bernanke
made cautiously optimistic comments about the economic recovery
and a government report showed the U.S. unemployment rate fell
although fewer jobs than expected were added in December.
Oil prices seesawed with the dollar immediately after the jobs
report showing U.S. nonfarm payrolls rose 103,000 in December,
below analysts' forecasts for 175,000 new jobs, while the
unemployment rate fell to 9.4 percent from 9.8 percent in
November, its lowest rate in 1-1/2 years. []
U.S. crude oil for February delivery <CLc1> rose 60 cents, or
0.68 percent, to $88.98 a barrel at 11:29 a.m. EST (1629 GMT),
ranging from $88.04 to $89.48.
Nearing midday in New York the dollar index <.DXY> was up and
the greenback was stronger against the euro <EUR=>, also in
volatile trading, though the euro had recovered from a four-month
low. []
"The employment data is disappointing, especially in light of
the enthusiasm that emerged earlier in the week on the ADP
employment data," John Kilduff, partner at Again Capital LLC in
New York, said.
"However, the decided downtick in the unemployment rate is
reassuring. In terms of energy prices, more robust employment
gains are necessary to sustain the price levels seen of late.
Unemployment remains at a level that will challenge the ability of
$3.00-plus per gallon gasoline to persist," Kilduff added.
Bernanke gave his first testimony to Congress on the economy
since the Fed launched a controversial plan to buy an additional
$600 billion in government bonds.
"We have seen increased evidence that a self-sustaining
recovery in consumer and business spending may be taking hold,"
Bernanke said in the testimony delivered after the jobs report was
out.
BRENT, U.S. CRUDE DISCONNECT
In a rare market move, the price of Brent and U.S. crude
futures pushed in opposite directions most of the day, though
trading for both contracts was volatile.
In London, ICE Brent crude for February <LCOc1> fell 39 cents
to $94.13 a barrel, trading between $93.38 and $94.58.
Analysts said the price premium <CL-LCO1=R> of Brent to U.S.
crude -- also known as West Texas Intermediate (WTI) -- remained
exceptionally high and should tighten over the coming weeks.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of Brent/WTI spread:
http://link.reuters.com/taj25r
Graphic of Brent/WTI correlation:
http://link.reuters.com/vev25r
John Kemp column on Brent vs WTI: []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
OIL SANDS FIRE IN CANADA
Overshadowed by the jobs data and Bernanke's remarks was news
that a fire on Thursday at the upgrading unit at Canadian Natural
Resources Ltd's <CNQ.TO> 110,000 barrel-a-day Horizon oil sands
facility in northern Alberta halted production.
The company has suspended production at the operation
following the explosion and blaze which injured four people.
[]
A month-long outage could cut the company's 2011 production by
about 1 percent from the midpoint of the company's estimate of
645,000-694,000 barrels of oil equivalent a day, Canaccord Genuity
analyst Phil Skolnick said in a note to investors.
"I don't get the impression that the Canadian fire had
anything to do with the rise in (U.S.) crude today. It's about the
portfolio reallocations today and strengthening of U.S. crude as
it readjusted from the recent blowup of Brent/WTI spread," said
Tom Knight, trader at Truman Arnold, in Texarkana, Texas.
(Additional reporting by Gene Ramos in New York, Zaida Espana in
London and Alejandro Barbajosa and Florence Tan in Singapore;
editing by Jim Marshall)
