Healthy jobs report helps lift oil prices

Oil prices have plunged by about 50 per cent from their June peaks. Photo / AP

Oil prices have made strong gains for a second day, helped by a surprisingly robust jobs report in the United States, the world's largest crude consumer.

US benchmark West Texas Intermediate (WTI) for March delivery advanced US$1.21 (2.4 per cent) to US$51.69 a barrel.

Brent North Sea crude for March, the European benchmark, closed at $US57.80 a barrel, up $US1.23 (2.2 per cent) from Thursday's closing level.

After several days of volatile trade in a market worried about ample supplies and slowing global economic growth, the two key futures contracts posted their best weekly performances since February 2011: WTI jumped 13.6 per cent and Brent added 9.4 per cent.

The closely watched US monthly jobs report came in much better than expected. The Labour Department reported the economy added 257,000 jobs in January and revised upward already healthy growth in the previous two months.

The unemployment rate edged up to 5.7 per cent from 5.6 per cent, but that was in part because more people were actively seeking jobs.

Bob Yawger of Mizuho Securities said the market's reaction was initially subdued and buying took a while to gain momentum. But the jobs report was positive for traders because "it implies a certain degree of demand in the market", he said.

Oil prices have plunged by about 50 per cent from their June peaks, largely owing to a surge in global reserves boosted by robust US shale production.

Andy Lipow of Lipow Oil Associates said the recent decline in the number of US drilling rigs was supporting prices somewhat but US supplies were still expected to increase.

"I think the market will make another run for the lower US$40s, because inventories will continue to rise in the US as refiners are still in maintenance season" and oil imports are still robust, Lipow said.

JPMorgan analysts forecast a "significant build" in global oil inventories in the first half of the year.

"Thereafter, market fundamentals improve in [the second half of 2015] spurring a small recovery in price," they said.

- AAP