Oil above $107 as jobs data lights demand hopes

SAN FRANCISCO (MarketWatch) � Crude-oil futures ended higher Friday, notching a weekly gain as better-than-expected data on U.S. employment in February lifted prospects for oil demand.

Traders also eyed developments in the Middle East following an Israeli air strike on Gaza, and digested inflation data from China that indicated the country may take measures to stimulate its economy.

Crude-oil futures for April delivery �rose 82 cents, or 0.8%, to end at $107.40 a barrel on the New York Mercantile Exchange. That was oil�s third session of gains.

Prices advanced 0.7% on the week. Futures have risen in four of the past five weeks.

Natural-gas futures lead gains amid energy futures, leaving behind a 10-year low set on Thursday.

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The U.S. created 227,000 jobs in February and more people found work in the prior two months than previously reported. The increase in nonfarm jobs topped 200,000 for the third straight month, which reinforces the view of an economy gathering strength as 2012 unfolds.

Economists expected an increase of 213,000 jobs, down from growth of 243,000 in January, according to Dow Jones Newswires. Read more on the jobs data.

�On this most volatile of trading days, we are set for fun and games, with nonfarm payrolls coming in slightly better than expected,� said Matt Smith, an analyst with Summit Energy, in note to clients.

Meanwhile, China, a top energy consumer, reported Friday that annual inflation fell to a 20-month low in February. The country�s National Bureau of Statistics said the consumer price index rose 3.2% compared to February 2010, falling short of the 3.4% increase forecast by economists. China consumer price rise weakens

The slowdown paves the way for China�s policy makers to use monetary policy to boost growth, which may result in greater demand for oil and other resources.

Investors parsed out the latest from Greece, where the government said Friday more than 80% of its private creditors had signed up to a debt-swap deal.

The swap was needed to prevent the country from defaulting and to secure a second bailout package from its international lenders. Read more on Greece in Europe Markets.

Simmering tensions in the Middle East played a part on oil�s gains. On Friday, a Israeli air strike killed a senior militant leader in Gaza, and as the news percolated some misinterpreted as a incident involving Iran.

The market also heard from the Organization of the Petroleum Exporting Countries, which released its monthly oil report Friday.

OPEC left its headline forecasts broadly unchanged from its previous report, as consumption growth in Asia offset weaker demand in the West. Global oil demand will continue to grow by 900,000 barrels a day this year, while the world�s need for crude is stable at 30 billion barrels a day, the group said.

The report said little about tensions between Iran and the West and identified the economic weakness in Europe as the main source of uncertainty in the oil market. Read more about the OPEC report.

Meanwhile, other energy products ended mostly higher.

April natural-gas futures �ended 5 cents higher, or 2.3%, at $2.32 per million British thermal units. On the week, however, natural gas lost 6.4%.

On Thursday, the product ended at a 10-year low after the U.S. Energy Information Administration reported a decline of 80 billion cubic feet in natural gas�s inventories for the week ended March 2. That was smaller than the market expected.

April gasoline �gained 2 cents, or 0.6%, at $3.33 a gallon. On the week, gasoline rose 1.8%.

Heating oil was the outlier, with the April contract down a penny, or 0.2%, at $3.26 per gallon. Prices gained 1.9% on the week, however.