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Oil futures settle higher, but snap streak of 4 weekly gains in a row

Those factors—bullish for oil prices—outweighed a disappointing jobs report showing companies added 160,000 new jobs to the U.S. workforce in April, compared with economists’ forecasts of 203,000, according to the Labor Department.

A weaker jobs reports suggest tepid demand for oil.

The continued spread of forest fires in Alberta, which started late Sunday, has resulted in the evacuation of some 8,000 people and threatens to cut nearly a million barrels a day from global supplies, analysts said.

Read: Canada wildfires continue to rage in oil-rich Alberta

Political infighting in Libya also is raising concerns about production and oil exports.

“I think [with oil moves today] you’ve had a bit of a battle between Friday’s nonfarm-payrolls, which were below expectations, but at the same time you’ve got the fires in Alberta that could be closing in on a million barrels a day,” said Robbie Fraser, commodity analyst at Schneider Electric.

On the New York Mercantile Exchange, West Texas Intermediate futures CLM6, +0.54%  gained 34 cents, or 0.8%, to close at $44.66 a barrel, while Brent crude LCON6, +0.60% the global oil benchmark, climbed 36 cents, or 0.8%, to settle at $45.37 a barrel on London’s ICE Futures exchange. Brent ended the week 4.2% lower, while WTI finished the week 2.7% lower.

Both contracts snapped a stretch of four straight weekly gains dating back to the week ended April 8, according to FactSet data.

Slack in the dollar DXY, +0.07%  offered some support to crude futures on the day. Market participants have taken Friday’s employment report as further evidence that the Federal Reserve will likely hold ultralow interest rates steady at its June meeting, which makes the buck less appealing to traders and reduces the relative costs of dollar-denominated assets, like crude oil.

“We are seeing the dollar pushing crude around as it has weakened a little bit now and that may be lending a bit of support to crude,” said Matt Smith, director of commodity research at ClipperData.

Crude futures had been tilting modestly lower as market participants said the focus had shifted to near-term oversupply, which has plagued the industry and pressured oil prices for weeks.

The prospect of declining production in the U.S. and elsewhere has helped lift crude prices from lows below $30 a barrel reached, where it traded as recently as February.

Despite initial gains earlier in the week, however, oil prices are heading downward in what some analysts interpreted as a shift in sentiment.

A report on rig counts from Baker Hughes Inc. BHI, +1.84% —viewed as a proxy for activity in the U. S.—showed that the number of active U.S. rigs drilling for crude fell for a seventh straight week. The oil rig count was down by 4 to 328 as of Friday. The total U.S. rig count fell by 5 to 415 rigs.

However, with prices now at levels that make drilling economical for some firms, the rig count might start rising soon and the decline in U.S. production may slow. This would, in turn, threaten the price recovery, analysts say.

But Matt Parry, a senior oil economist at International Energy Agency, said there are signs that tightening supply is starting to take hold and predicts that demand for crude is on the rise.

“After being incredibly oversupplied over the past couple of years, now we are getting close to where it’s near to balanced,” Parry said.

Parry is forecasting demand for crude to be at 1.2 million barrels a day on average over the next five years. “Supply is quite slow to react whereas demand is pretty quick,” Parry added.

Looking ahead, Thursday reports from IEA will give greater guidance on the international supply/demand dynamic.

A separate report from the Organization of the Petroleum Exporting Countries is due Friday. Market participants will be watching output levels from swing-producer Saudi Arabia, which typically increases its production at this time of the year.

The Saudis’ desire to compete with rival Iran, fresh off the end of international sanctions that have impeded its oil exports, may result in an overall increase in OPEC output. Long-standing tensions between the Saudis and Iran helped scuttle an attempt at an international pact between OPEC and non-OPEC producers to freeze production back in April.

Elsewhere, Nymex reformulated gasoline blendstock—the benchmark gasoline contract RBM6, +0.51% rose 0.5% to $1.4962 a gallon and posted a 6.7% weekly drop. June natural gas NGM16, +0.82%  gained 2.5 cents, or 1.2%, to settle at $2.1010 per million British thermal units, but finished down 3.5% on the week. June heating oil HOM6, +0.45%  rose less than a penny, or 0.6%, to settle at $1.3373 a gallon.