The release of U.S. data showing unemployment at its highest level for 25 years kept gains in check, as a deepening slowdown in the world's top oil consumer suggests further curbs on demand.
U.S. crude ended the day up $1.91 to $45.52 a barrel in New York, and hit a trading high of $45.88.
Meanwhile in London, Brent crude lost its rare premium to U.S. crude because of a decline in U.S. inventories. High U.S. stocks, particularly at the Cushing oil hub, had been keeping the American market at a discount to Brent.
OPEC0:00/4:29Shell's offshore prioritiesU.S. jobs figures showing that employers axed 651,000 jobs in February kept the global economic downturn close to the forefront, though they were broadly predicted by economists.
"The numbers, while bad, were in line with expectations; so with the dollar under some pressure, it looks like crude may continue to be supported," said Addison Armstrong of Tradition Energy in Stamford, Connecticut.
0:00/4:07The stock market's lost decadeThe dollar remained down after the Labor Department's release of the payrolls report Friday morning. Weakness in the U.S. currency can boost investor demand for oil and other dollar-priced commodities.
"I think the U.S. payroll figures are not as bad as they might have been, but they are still not good," said Christopher Bellew, an oil broker at Bache Commodities in London.
ChinaOil was also supported by China's optimism that its domestic economy was recovering and official promises of more swift stimulus action when required. China is the world's second-largest oil consumer.
Top Chinese officials said on Friday substantial fiscal and monetary stimulus was breathing life back into the world's third-biggest economy, suggesting Beijing saw no need to boost the existing investment plan of nearly $600 billion.
Oil has traded in a band from around $33 to $50 since mid-December, pressured by slumping demand due to the economic downturn. Expectations OPEC might cut production again in a bid to boost prices when it meets on March 15 have added support.
OPEC has already agreed to cut production by 4.2 million barrels per day since September, and a Reuters survey found that members have met 81% of their output reductions as of last month.
Angola, which holds the presidency of the 12-member group, will not advocate further production cuts when the group meets, OPEC sources said, but Venezuela, Algeria and Libya have raised the possibility of a further cut.
"We expect the cartel to put through a modest cut when it gets together and judging by how well the market is holding up, participants seem to be expecting the same," said MF Global.
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