Oil prices rose on Friday in volatile trading, as stronger-than-expected U.S. jobs data reinforced economic growth expectations but also the possibility it might trigger a pull back from loose monetary policy and strengthen the dollar.

A bounce by the euro erasing earlier losses against the dollar helped send Brent May crude to a contract peak above $118 a barrel and U.S. crude jumped to a 2-1/2-year peak near $108.

Prices seesawed after the jobs report. Traders and analysts said the increase in jobs should boost oil demand. The report initially boosted the dollar and kept in play the view that the U.S. Federal Reserve might curb its current ultra-loose monetary policy that tends to benefit riskier assets like commodities.

Ahead of the jobs report, U.S. crude pushed above $107 to its highest intraday price since September 2008. Geopolitical supply risks supported both U.S. crude and Brent, as Libya's conflict and Middle East unrest persist.

Brent crude for May rose 82 cents to $118.18 a barrel by 12:16 p.m. (1616 GMT), reaching a contract peak of $118.59. Brent's front-month 2-1/2-year high of $119.79 was struck on February 24.

Brent has recovered after falling below $108 in the aftermath of Japan's March 11 earthquake and tsunami.

U.S. crude rose 76 cents $107.48, having reached $107.93, the highest intraday price since September 2008.

(Additional reporting by Nia Williams in London and Alejandro Barbajosa in Singapore; Editing by David Gregorio)