OIL prices rose and settled above US$103 a barrel yesterday, rebounding from a two-day sell-off fueled by a jump in US crude supplies.

The gains came after a report showing that unemployment benefits dropped to a four-year low, suggesting US employers kept hiring in March at a healthy pace and raising hopes that demand for energy will grow in the world's leading economy.

Benchmark oil for May delivery gained US$1.84 to settle at US$103.31 a barrel on the New York Mercantile Exchange. The contract fell US$2.54 in the previous session, joining a global selloff in the equity and commodity markets after a resurgence in debt concerns in Europe.

"We've fallen pretty hard, pretty quickly" and many investors are jumping back in on the expectation that prices are headed higher, said Peter Donovan, a broker with Vantage Trading.

On Wednesday, the US Energy Department's Energy Information Administration said crude inventories surged last week by 9 million barrels, or 2.5 percent, to their highest level since June. The supply jump was the largest on record for that week of the year, energy trader and consultant The Schork Group said in a report.

Donovan also noted that the New York Mercantile Exchange is closed for Good Friday, and investors tend to buy oil contracts ahead of long weekends. They do so as an insurance policy against any military action, offshore spill or other development that would constrict world supplies and push the price of oil higher, he said.

The government also is scheduled to release a new jobs report Friday that could show another increase in the number of working Americans. If the workforce grows, it likely adds more cars to the daily commute. That could push US gasoline and oil demand higher.

In other energy trading in New York, natural gas fell 5.2 cents to US$2.089 per 1,000 cubic feet. Heating oil was almost a penny higher at US$3.1692 per gallon.

Source:shanghaidaily