Oil poised for 3% weekly gain on rising Middle East tensions, better outlook for US By Reuters

By Nicole Jao

(Reuters) – Oil prices fell in early Asian trade on Friday but were on course to gain more than 3 percent on the week as U.S. jobs data eased concerns about demand and lingering fears of an expansion the conflict in the Middle East.

Futures were down 9 cents, or 0.11 percent, at $79.07 a barrel by 0030 GMT. U.S. West Texas Intermediate crude futures were down a cent at $76.09 a barrel.

However, both Brent and WTI were set to gain more than 3% on the week.

Israeli forces stepped up airstrikes over the Gaza Strip on Thursday, killing at least 40 people, Palestinian medics said, in a continuing battle with Hamas-led militants as Israel braced for a potential wider war in the region.

“continued its recovery from its recent slump as heightened geopolitical risks came into focus,” ANZ analyst Daniel Hynes said.

The killing of senior members of the militant groups Hamas and Hezbollah last week raised the possibility of Iranian retaliatory strikes against Israel, raising concerns about oil supplies from the world’s biggest producing region.

Iran-aligned Houthi militants continued attacks on international shipping near Yemen this week in solidarity with the Palestinians in the war between Israel and Hamas.

The United Kingdom’s Maritime Merchant Operations Agency (UKMTO) announced on Thursday that it had received a report of an incident off the coast of Mokha, a port city in Yemen.

Also providing support, National Oil Corp. of Libya declared force majeure at its Sharara field on Wednesday, it said in a statement, adding that the company had gradually reduced production from the field due to the protests.

Prices rose after data showed that the number of Americans filing new claims for jobless benefits fell more than expected last week, suggesting fears that the labor market was falling apart were overblown and easing recession concerns.

The dollar rose on jobs data. A stronger dollar tends to lower oil prices because buyers using other currencies must pay more for their dollar-denominated crude.