Oil prices rose to above $101 a barrel Friday as traders awaited a U.S. jobs report for evidence about the strength of the U.S. economy and demand for crude.
By early afternoon in Europe, benchmark crude for January delivery was up from $101.02 to $101.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to settle at $100.20 on Thursday.
In London, Brent crude was up $1.16 cents at $110.15 on the ICE Futures exchange.
Markets were also bolstered by a speech by German Chancellor Angela Merkel calling for tighter fiscal discipline in the European Union, which provided hope that the eurozone would be taking more significant steps to control its debt crisis and ensure the future of its common currency.
Crude has jumped from $75 during the last two months amid signs the U.S. economy will likely avoid a recession. Investors will be closely watching the Labor Department's November unemployment report later Friday for evidence economic growth is strengthening, which could justify higher crude prices.
Analysts expect the economy added about 120,000 jobs last month.
"All eyes remain on the release of the U.S. non-farm payrolls data that could provide a better insight of the U.S. economic conditions, giving the market some clear direction," said a report from Sucden Financial in London.
Traders are also concerned about rising tensions over possible sanction against Iran, OPEC's second-largest producer, because of its nuclear program. Some analysts, such as J.P. Morgan, say that Iran may pre-emptively cut oil exports if sanctions are imminent, a move that would send oil prices soaring.
"This would undoubtedly shock the oil market, and the initial market shock could be in the $20 to $30 per barrel range," J.P. Morgan said in a report. "The risks of such a disruption have materially increased."
In other Nymex trading, natural gas fell 3.4 cents at $3.614 per 1,000 cubic feet. Heating oil added 5.67 cents to $3.0262 a gallon and gasoline futures gained 6.61 cents to $2.6240 a gallon.
Alex Kennedy in Singapore contributed to this report.