Light sweet crude for January delivery gained 0.42 percent or 36 cents to $86.62 a barrel in electronic trading on the New York Mercantile Exchange during the Asian trading hours. Brent crude oil futures for the January delivery rose 0.30 percent or 32 cents to $107.35 a barrel on the ICE futures exchange in London.
Investors are eagerly waiting for the U.S. Department of Labor's monthly non-farm payrolls report, which is the most closely watched economic statement pertaining to the job market and a key gauge for the direction and pace of the economic recovery.
The much awaited U.S. jobs report is due to be released before markets open Friday and is expected to show that the world’s largest economy added 80,000 jobs last month, following a 171,000-gain in October. The unemployment rate is likely to edge up to 8 percent in November from 7.9 percent in the previous month.
“The November payroll figures are expected to show the negative impact of Hurricane Sandy. Our best guess is that the storm-related job losses may have totaled 75K, implying an underlying trend gain of 155K,” a note from Credit Agricole stated.
Oil prices are heading for their biggest weekly loss since late October with U.S. crude declining nearly 3 percent and Brent down nearly 3.6 percent in the week, as concerns over the euro zone economic outlook and a looming fiscal crisis in the U.S. weighed on the sentiment.
Light sweet crude for the January delivery declined 1.8 percent or $1.62 and settled at $86.26 a barrel on the New York Mercantile Exchange while Brent crude for the January delivery declined 1.6 percent and settled at $107.03 a barrel.
The European Central Bank Thursday slashed its euro zone growth forecasts for 2012 and 2013. The ECB lowered its 2012 growth forecast from -0.4 to -0.6 percent and currently expects 2013 growth forecast to be in a range of 0.9 percent contraction and a 0.3 percent growth, down from its prior estimate of 0.4 percent contraction and 1.4 percent growth.
"The weaker ECB story will weigh on Brent prices and ECB President Mario Draghi's comments will weigh on expectations. The big picture is that Europe is weak, U.S. is undecided and China is strong, so the news flow from these three will be what determines prices,” Jonathan Barret, chief executive officer at BarratBulletin, a Sydney-based research firm, told Reuters.
Economic data from the U.S. was mixed during the week and is not helping the outlook either. The U.S. manufacturing activity declined to the lowest level in more than three years in November while the services sector grew in the same month.
The Institute of Supply Management's U.S. manufacturing Purchasing Managers' Index declined to 49.5 in November, the lowest level since July 2009, from 51.7 in October and also fell short of Reuters' expectation of 51.3 reading, highlighting the worrying outlook of the U.S. recovery. Meanwhile, traders continued to remain wary of the ongoing negotiations to avoid the fiscal cliff.