* U.S. nonfarm payrolls rise beats forecast, supports oil
* Dollar rebound on jobs report limits oil rise
* Coming up: API oil inventory data, 4:30 EST Tuesday
(Updates with intraday high hit post-settlement, paragraph 4)
By Robert Gibbons
NEW YORK, Nov 5 (Reuters) - Oil prices rose to a two-year
peak on Friday, posting a fifth straight gain after a seesaw
session as support from a stronger-than-expected U.S. jobs
report offset a rebound by the dollar.
U.S. crude oil prices pushed to an intraday peak above $87
a barrel ahead of the nonfarm payrolls report, when the dollar
was weaker as the appeal of commodities continued to be boosted
by this week's Federal Reserve moves to boost the economy.
The dollar rallied on the surprisingly strong jobs report,
having been under pressure after the Federal Reserve on
Wednesday committed to buying $600 billion in government bonds
to bolster a faltering recovery.
U.S. crude for December delivery <CLc1> rose 36 cents to
settle at $86.85 a barrel, the highest close since October
2008. Friday's $87.43 peak reached in post-settlement trading
was the highest price since $89.82 was struck intraday on Oct.
9, 2008.
Prices rose $5.42, or 6.6 percent, for the week, the
biggest percentage gain since the week to Feb. 19. Total crude
trading volume was lackluster, at 501,000 lots with less than
an hour of trading left on Friday, nearly 25 percent below the
250-day average.
In London, ICE December Brent crude <LCOc1> rose 11 cents
to settle at $88.11.
"The dollar's bounce limited the boost from the jobs report
and prices had moved up so much this week the market seemed to
be taking a breather," said Chris Dillman, analyst at Tradition
Energy in Stamford, Connecticut.
U.S. nonfarm payrolls in October posted the first increase
since May, rising 151,000 -- more than double the expected
60,000 rise. But the unemployment rate was unchanged at 9.6
percent. []
The dollar rebounded from an 11-month low hit on Thursday
against a basket of currencies <.DXY> and the euro slipped
versus the greenback. []
U.S. stock indexes ended slightly higher, but up a fifth
straight week and posting strong weekly gains. []
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For more on the Fed decision, click: []
For a PDF on what comes after the Fed decision:
http://r.reuters.com/cyh73q
FACTBOX on policymaker reaction to Fed: []
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Oil prices have recovered much of the ground lost between a
July 2008 record high of $147.27 a barrel and the December 2008
low of $32.40 hit during the recession.
Oil also received a boost this week when Saudi Arabia's oil
minister Ali al-Naimi and other OPEC member officials said $90
crude oil would be tolerated by consumers. []
Investors took the remarks as a signal OPEC would not send
more barrels into the market to dampen prices that got too far
above $80 a barrel, a change from previous indications.
The dollar's slide also had concerned producers as the
value of greenbacks received for dollar-denominated oil
diminished even as prices for other commodities bought by OPEC
producing countries, like grains, were on the rise.
A weak dollar also can lift oil prices because it attracts
investment from foreign exchange markets seeking better
returns.
Money managers raised net long crude positions on the New
York Mercantile Exchange in the week to Nov. 2 to their highest
level since April, the U.S. Commodity Futures Trading
Commission said on Friday. []
JP Morgan on Thursday raised its price forecast for U.S.
crude in 2011 by more than $7 to $89.75 a barrel, and lifted by
$2 its expectations for Brent. But other analysts have noted
that oil's fundamentals have not recovered to pre-financial
crisis levels and cautioned about the rally's sustainability.
"Although we are up again as of this writing in a number of
commodity markets, including energy, we have trouble seeing how
much longer the current run can extend to, given that at some
point, higher commodity prices will lead to even higher
inflation and interest rates in emerging countries," MF Global
said in a research note.
(Additional reporting by Gene Ramos in New York, Alejandro
Barbajosa in Singapore and Ikuko Kurahone and Zaida Espana in
London; Editing by David Gregorio)
