* US nonfarm payrolls below forecasts, pressures dollar
* Cold weather in Europe propels Brent above $91
* Several banks boost oil price forecasts through 2011
* Coming up: API inventory data on Tuesday
(Recasts, updates prices, market activity to settlement)
By Robert Gibbons and Joshua Schneyer
NEW YORK, Dec 3 (Reuters) - U.S. oil prices rose to a
25-month high on Friday, the third straight rise, as a weaker
U.S. dollar spurred commodities investment and cold weather in
Europe and the U.S. Northeast lifted heating fuel futures.
The euro rallied versus the dollar after the U.S.
government said nonfarm payrolls increased much less than
expected and the unemployment rate rose to a seven-month peak.
Plunging temperatures in Europe and colder weather in parts
of the United States prompted a surge in demand for heating oil
and other heating fuels.
U.S. crude futures <CLc1> for January rose $1.19 to settle
at $89.19 a barrel, the highest close since Oct. 7, 2008,
bouncing after an early decline on the weak jobs data.
Prices rose 6 percent over three days, the biggest such
percentage increase since the three days to Oct 1.
For the week, U.S. crude rose 6.48 percent, a second
straight weekly gain and the best percentage gain since the
6.66-percent boost in the week to Nov. 5.
Total U.S. crude trading volume was above 790,000 on
Friday, with less than an hour of post-settlement trading left,
30 percent above the 30-day average.
ICE Brent crude futures <LCOc1> traded up $1.12 to $91.80,
after setting a fresh two-year high of $91.85.
"Today's crude prices are up with support from higher
heating oil on the back of cold weather both here in the U.S.
and in Europe and the weakened dollar, which has also
encouraged buying," said Andy Lebow of MF Global in New York.
Twelve people froze to death in Poland overnight and air,
rail and road traffic across Northern Europe remained badly
disrupted by snow and ice on Friday. []
The U.S. National Weather Service, in its eight to 14-day
outlook issued on Thursday, called for below-normal
temperatures for much of the eastern half of the country, which
includes the world's largest regional market for heating oil.
Front-month U.S. heating oil <HOc1> rose 1.3 percent on
Friday.
The U.S. dollar <.DXY> fell about 1.4 percent against a
basket of foreign currencies on Friday, as the jobs report
weighed on the greenback and the euro was supported by more
confidence that Europe can eventually solve its debt crisis.
[]
Oil and dollar-denominated commodities often move inversely
to the dollar. A weaker dollar typically lifts oil prices as it
lowers the value of greenbacks paid to producers while making
it less expensive for oil consumers using other currencies.
U.S. nonfarm payrolls rose a less-than-expected 39,000 in
November, the Labor Department said. The unemployment rate was
increased to 9.8 percent. []
"That was a very bad number," said Thorbjrn Bak Jensen with
Global Risk Management in Denmark.
Economists had expected payrolls to increase 140,000 last
month and the unemployment rate to be flat at 9.6 percent.
BANKS GIVE BULLISH VIEWS
At least four major banks boosted longer-term outlooks for
oil prices this week, with one of the most bullish, Goldman
Sachs, calling for U.S. crude futures to rise to $100 a barrel
next year, as global economies rebound faster than expected.
Deutsche Bank, JP Morgan and Societe Generale also boosted
their oil price outlooks this week. []
But the disappointing U.S. jobs report was not the only
factor that might fuel investor caution.
Chinese state news agency Xinhua reported that top
Communist Party leaders have decided China will switch to a
"prudent" monetary policy from a moderately loose stance. This
could prompt interest rate increases and lending controls.
China recently raised bank reserve requirements as part of
an effort to cool inflation. Oil investors and analysts have
noted that demand growth in the No. 2 oil consumer would most
likely be curbed if interest rates are increased.
(Additional reporting by Gene Ramos in New York and Ikuko
Kurahone in London; Editing by David Gregorio)
