* Fighting in Ukraine escalates
* U.S. job growth surges, unemployment at 5-1/2 year low
* Record high U.S. crude inventories weigh on oil
* U.S. to create 1-mln-barrel gas reserve to avert shortage
(New throughout, updates prices and market activity to
settlement, adds CFTC data)
By Elizabeth Dilts
NEW YORK, May 2 Oil prices rose on Friday as
violence in Ukraine and job growth in the United States spurred
buying, and technical short-covering before the weekend also
U.S. and Brent crude oil were down on a weekly basis after
data earlier in the week showed record high U.S. crude
"After a significant fall this week, there was short
covering going into the weekend on the back of increased
violence in the Ukraine," said Andrew Lipow, president of Lipow
Oil Associates in Texas. "The jobs report was supportive, which
leads the market to expect an improvement in demand."
On Friday, more than 40 people were killed in Odessa, where
pro-Russian activists and supporters of Ukrainian unity fought.
Earlier, in the eastern city of Slaviansk,
pro-Moscow rebels shot down two Ukrainian helicopters, killing
two crew members.
In Washington, U.S. President Barack Obama and German
Chancellor Angela Merkel vowed more sanctions against Russia if
Moscow impeded planned elections in Ukraine this
Russia said it would reduce natural gas supplies to Ukraine
in June if no prepayment is received this month.
Oil prices were also were supported by data that showed U.S.
employers hired workers in April at the fastest clip in more
than two years. Unemployment dived to a 5-1/2-year low of 6.3
percent, pointing to a rebound in economic growth in the world's
largest oil consumer.
June Brent crude settled 83 cents higher at $108.59
a barrel, but still ended the week nearly 1 percent lower. U.S.
crude rose 34 cents to $99.76 a barrel, and ended the
week 0.8 percent lower.
U.S. and European oil benchmarks had tumbled mid-week after
U.S. Energy Information Administration data showed U.S. crude
inventories hit a record high last week on the back on strong
On Friday, U.S. gasoline futures settled half a cent
higher at $2.9445 per gallon, supported by news the U.S. Energy
Department will establish a 1 million-barrel gasoline reserve to
prevent fuel shortages in the U.S. Northeast.
Gains were limited by the impending return of more Libyan
exports. On Thursday in Libya, state-run National Oil Corp (NOC)
said the Zueitina port was expected to load its first tanker of
crude since reopening after nearly 10 months due to protests.
Money managers pared their net long U.S. crude futures and
options positions in the week to April 29, the U.S. Commodity
Futures Trading Commission said late on Friday.
(Additional reporting by Julia Payne in London and Florence Tan
in Singapore; Editing Alden Bentley, Bernadette Baum and David