Oil price hits $87 per barrel in Asia

Oil hovered near $87 a barrel Monday in Asia after a jump in new U.S. jobs suggested demand for crude could improve.

Benchmark oil for December delivery was up 10 cents at $86.95 a barrel at late morning Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose 36 cents to settle at $86.85 on Friday.

Gains in the oil price last week stemmed from the U.S. Federal Reserve’s decision to sink $600 billion into buying Treasurys over the next eight months to stimulate the sluggish economy by lowering long-term interest rates.

Anticipation of the announcement had weighed on the dollar and boosted the oil price since crude is traded in dollars and becomes more attractive to holders of foreign currencies when the greenback falls. But the weeklong rally leveled off Friday as the dollar regained some strength.

There was encouraging news on the economic front, as the Labor Department reported that employers added 151,000 jobs in October, the first net gain in five months. The unemployment rate remained at 9.6 percent.

The jobs report could signal more improvement in the economy, which could lead to stronger demand from consumers and businesses for fuel. In the short-term, however, improved economic indicators could strengthen the dollar and dampen enthusiasm for oil.

In Nymex trading in December contracts, heating oil was flat at $2.38 a gallon, gasoline was steady at $2.18 a gallon and natural gas gained 3 cents to $3.97 per 1,000 cubic feet.

In London, Brent crude rose 1 cent to $88.12 a barrel on the ICE Futures exchange.

Source: AP