Oil prices rose on Friday in choppy trading, with U.S. crude reaching a 2-1/2-year high as supportive U.S. jobs data reinforced economic growth expectations.

Geopolitical supply risks also supported oil as Libya's conflict and Middle East unrest persist and elections near for OPEC-member Nigeria, brokers and analysts said.

Oil prices also benefited from momentum after ending the first quarter posting double-digit quarterly gains.

Brent crude for May rose 73 cents to $118.09 a barrel by 1:49 p.m. (1749 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 69 cents to $107.41, having reached $107.93, the highest intraday price since September 2008. U.S. crude took out the previous 2011 peak ahead of the jobs data.

Total U.S. crude trading volume, at 380,000 lots, remained well below the 30-day average, while Brent's 414,000 lots was only 15 percent below its 30-day average.

You have the jobs report, Libya has escalated, you've got Nigeria elections soon and Syria and the Middle East unrest and its the first day of the quarter so you have new money come in, said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

There is a tug of war going on with the dollar after the jobs report and it's Friday so there may be reluctance to go into the weekend short.

U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent. Nonfarm payrolls rose 216,000, more than the 190,000 expected.

The U.S. manufacturing sector grew at a marginally slower pace in March although a measure of prices rose to their highest level since July 2008, according to an industry report that some viewed as adding support for oil prices.

The trivial drop back in the ISM manufacturing index to 61.2 in March, from 61.4, still leaves it at a level consistent with GDP growth of more than 5 percent annualized, Paul Ashworth, chief U.S. economist at Capital Economics in London said in a note.

He cautioned actual growth, will be lower, because of the less robust services and weak housing sectors.


Oil seesawed after the jobs report as the dollar strengthened and revived, if briefly, the view that the U.S. Federal Reserve might curb its current ultra-loose monetary policy that tends to benefit riskier assets like commodities.

The U.S. dollar slipped against the euro, though the dollar index retained some gains. More losses versus the euro were seen likely in the near-term on expectations the European Central Bank will tighten monetary policy before the U.S. Federal Reserve.

New York Federal Reserve President William Dudley said it would be a surprise if the Fed did not complete its $600 billion in bond purchases, dampening belief that the positive jobs data would alter policy near term.


Oil prices remain supported by conflict in Libya and Middle East turmoil.

Libyan leader Muammar Gaddafi's forces stormed the western rebel outpost of Misrata, while insurgents marshaled defenses in their eastern heartland.

Further supply disruption came from Gabon in central Africa, which produces between 220,000 and 240,000 barrels per day of crude. Striking workers shut half the output on Friday and were to halt the rest within 48 hours.

Bahrain has stepped up arrests of cyber activists and Shi'ites and protests broke out in Syria after Friday prayers, a favored time for demonstrations in the Middle East.

(Additional reporting by David Sheppard in New York, Nia Williams in London and Alejandro Barbajosa in Singapore;editing by Sofina Mirza-Reid)