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updated: 7/8/2011 8:39 AM

Oil hovers below $99 ahead of key U.S. jobs data

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Associated Press

SINGAPORE -- Oil prices hovered below $99 a barrel Friday in Asia ahead of key jobs data from June that could shed light on the strength of the U.S. economy.

Benchmark oil for August delivery was down 4 cents to $98.63 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $2.02 to settle at $98.67 on Thursday.

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In London, Brent crude fell 72 cents to $117.87 per barrel on the ICE Futures exchange.

Traders will be closely eyeing the Labor Department's monthly employment report scheduled for release before the U.S. market opens later Friday. Economists estimate the unemployment rate will remain at 9.1 percent and that employers added 90,000 jobs last month.

On Thursday, the department said the number of Americans who applied for unemployment benefits fell last week to the lowest level in seven weeks. Payroll processor ADP said the private sector added 157,000 jobs last month, which was more than double what economists had forecast.

"The employment figures were encouraging," Cameron Hanover said in a report. "This market now has such powerful upward momentum behind it that everything is coming up bullish."

"Low interest rates are enough of a reason to buy commodities. Oil is the market darling now."

Oil dropped to $90 last week after the U.S. and other nations in the International Energy Agency said a week earlier that they will release 60 million barrels of crude from emergency stocks. But crude has rebounded on expectations global supplies will tighten and demand will improve during the next 18 months.

"It took just five days for the market to shrug off the 60 million barrel stock release," J.P. Morgan said in a report. "There is no supply cushion to fall back on. The upside price risks to 2012 have materially increased."

J.P. Morgan said it raised its forecast for the average crude price in the fourth quarter of next year to $120 from $110.

In other Nymex trading in August contracts, heating oil fell 1.3 cents to $3.09 a gallon while gasoline slid 1.6 cents at $3.11 a gallon. Natural gas futures added 1 cent at $4.14 per 1,000 cubic feet.

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