Chemical Guide

NEW YORK (Dow Jones)–Oil futures were nearly unchanged Friday after hitting a two-year high overnight, after the Labor Department said the U.S. economy added jobs in October.

Nonfarm payrolls rose by a larger-than-expected 151,000 in October, the first gain since May, the Labor Department said Friday. However, the unemployment rate remained at 9.6%.

Light, sweet crude for December delivery traded 1 cent higher at $86.50 a barrel on the New York Mercantile Exchange after touching a two-year high of $87.22 a barrel earlier. Brent crude on the ICE futures exchange rose 11 cents, or 0.1%, at $88.12 a barrel.

Oil prices are heavily influenced by employment data, as rising employment would boost gasoline demand by increasing the number of commuters on the road. But a stronger dollar Friday kept crude prices from rising even further, said Stephen Schork, editor of The Schork Report, an energy markets newsletter. Oil prices have a close inverse relationship with the dollar, with an uptick in the greenback making crude more expensive in other currencies.

“The dollar is certainly oversold and good economic headlines are generally good for the dollar,” Schork said.

The ICE Dollar Index, which measures the dollar against a basket of trade-weighted currencies, rose to 76.406 from 75.732 earlier.

Friday’s stronger dollar bucks the greenback’s trend over the last several months. On Thursday, the dollar hit a 10-month low against the euro, in reaction to the Federal Reserve’s announcement of new monetary stimulus.

Crude prices are up more than 6% this week, lifted by the Fed’s plan to inject $600 billion into the financial markets over the next eight months. That move, called quantitative easing, weakens the dollar because it increases the money supply, in turn making crude cheaper in other currencies.

Morgan Stanley analyst Hussein Allidina predicted oil prices would average $100 a barrel in 2011 in a Thursday report, saying economic trends have been supportive of higher commodities prices.

Front-month December reformulated gasoline blendstock, or RBOB, was down 0.34 cent, or 0.2%, at $2.1737 a gallon. December heating oil gained 0.6 cent, or 0.3%, at $2.3792 a gallon.

Source: online.wsj.com