Oil above $107 as Gadhafi pushes back Libya rebels

Oil prices rose above $107 a barrel Friday as investors worried a prolonged civil conflict in Libya will keep the OPEC nation's crude exports off the market longer than expected.

By early afternoon in Europe, benchmark crude for May delivery was up 50 cents to $107.22 a barrel — after earlier in the session touching $107.65, the highest since September 2008 — in electronic trading on the New York Mercantile Exchange. The contract rose $2.45 to settle at $106.72 on Thursday.

In London, Brent crude was up 25 cents at $117.61 a barrel on the ICE futures exchange.

On Thursday, forces loyal to Libyan leader Moammar Gadhafi continued to push back rebels, recapturing the key oil town of Brega. Most of Libya's 1.6 million barrels a day of crude output capacity has been shut down since the uprising began in February.

"The counteroffensive by Gadhafi loyalists has made it clear that we are miles from the end-zone and even further from the end-game," Cameron Hanover said in a report. "And Libyan oil is unlikely to return to the market any time soon."

Investors are also focused on Friday's U.S. nonfarm payrolls report for March, looking for confirmation of a bettering economy. The unemployment rate is expected to remain unchanged at 8.9 percent.

"Jobs growth has been sluggish and sustained increases in this indicator may be seen as a positive for oil demand," according to a report from Sucden Financial in London.

Crude prices were also boosted by strong manufacturing data in China, which led global oil demand growth last year as developed countries struggled out of recession. China said Friday its Purchasing Managers Index, or PMI, rose to 53.4 last month from 52.2 in February.

In other Nymex trading for April contracts, heating oil rose 0.23 cent to $3.1148 a gallon and gasoline added 0.87 cent to $3.1164 a gallon. Natural gas dropped 2.6 cents to $4.363 per 1,000 cubic feet.