NEW YORK -- The price of oil fluctuated Friday as a disappointing U.S. employment report gave traders another reason to both worry about the economy and to expect the Federal Reserve to take action to spur growth.
Benchmark crude was up 67 cents to $96.20 around midday, although the initial reaction to the jobs report was negative. The price dropped nearly $2 in the first hour of trading on the New York Mercantile Exchange after the government reported that the economy added a weaker-than-expected 96,000 jobs last month.
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The pace of hiring this year hasn't been strong enough to jump-start the economic recovery. And that means demand for energy, including gasoline for commuting to work, remains constrained. Gasoline demand rose less than 1 percent in the four weeks ended Aug. 31 compared with same period a year ago, the government said Thursday.
But the weak jobs report increases the likelihood that the Federal Reserve will unveil a new bond-buying program designed to lower long-term interest rates and encourage borrowing. The expectations of economy-boosting measures, not only in the U.S. but in China and Europe, have supported oil prices for the past few weeks. That sentiment appeared to win out as trading progressed on Friday.
"Oil has hit a sweet spot -- it can't get too hot and it can't get too cold," said Phil Flynn of Price Futures Group.
A report out Friday suggests the price may still be too hot for the Obama administration however. While the move has been considered for weeks, Reuters is reporting that the White House is mulling a release much larger than the 30 million barrels from last year in an effort to stem the higher cost of oil and gasoline.
Gasoline prices spiked last week as the Gulf Coast braced for Hurricane Isaac and some refineries shut down. Prices slipped slightly after Isaac's threat passed. The price at the pump stayed steady Friday at $3.82 a gallon, according to AAA, Wright Express and the Oil Price Information Service. That's still the highest price ever for this time of year.
Brent crude, which is used to price international varieties of oil, rose 59 cents to $114.08.
Other futures prices on the New York Mercantile Exchange:
-- Wholesale gasoline increased 5 cents to $3.04 a gallon.
-- Heating oil was flat at $3.14 a gallon.
-- Natural gas lost 10 cents to $2.68 per 1,000 cubic feet.