* Investors doubt Libyan exports will return quickly
* U.S. reports solid job growth in March as winter retreats (Adds CFTC data)
By Anna Louie Sussman
NEW YORK, April 4 U.S. crude oil rose on Friday as data showed strong jobs growth in the United States and Brent crude followed suit as investors cast doubt on reports Libya's oil ports were about to reopen.
Both benchmarks retreated from the day's highs along with the U.S. equities market, which fell sharply from the intraday record highs hit after the March U.S. nonfarm payrolls report was released. The report showed 192,000 jobs were added in March.
The jobs figure was seen as confirmation that the weakness in the U.S. economy in January and February was the result of severe winter weather.
Expectations had been building that an eight-month blockage of Libya's oil export ports would end after rebels and the government said they were close to an agreement.
The Libyan government said it had seen evidence of "good intentions" at indirect talks with eastern rebels that could lead to renewed exports.
Previous reports of the reopening of ports have proven false and investors suspected there will again be no breakthrough.
"In the oil market it is Libya that is pulling the strings," said David Hufton, managing director of London brokerage PVM Oil Associates. "High hopes of an imminent settlement with rebels in the east of the country have been punctured."
May Brent crude rose 57 cents to settle at $106.72 a barrel, down 1.3 percent for the week. U.S. crude for May gained 85 cents to settle at $101.14 a barrel, after earlier notching a high of $101.63. Front-month U.S. crude fell 0.6 cents on the week, its first weekly loss in three weeks.
The spread between Brent and U.S. crude, also known as West Texas Intermediate, or WTI, had narrowed to as low as $4.81 by midweek as Brent lost more than $3 on hopes that Libyan oil would soon be back online. It widened to nearly $6 on Thursday before narrowing again on Friday to settle at $5.58.
"The spread's in today by about 50 cents, which suggests that concerns about Libyan oil making its way back onto the world market place has kind of run its course, and the focus is back on Cushing oil flowing down to the Gulf Coast," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.
The restart of Libya's eastern oil ports could release about 600,000 barrels per day (bpd) of crude, bumping up the OPEC producer's output from around 150,000 bpd, but still far from the 1.4 million bpd it produced last July.
Investors remained cautious after a breakdown in agreements between the Libyan government and rebels earlier this year.
Geopolitical risk buoyed oil markets ahead of the weekend, despite a falling U.S. equities market, analysts said, citing the ongoing tensions in Libya and the Russia/Ukraine crisis.
Britain urged its European Union partners on Friday to press ahead with preparing tough economic sanctions against Russia, saying large numbers of Russian forces remained on Ukraine's eastern border and there had been only a "token" withdrawal.
"It's hard to get too bearish going into the weekend with so many unknowns: Russia, Ukraine, Libya," said Phil Flynn, an analyst with the Price Futures Group in Chicago.
"People don't want to be short in case something hits the fan over the weekend, which it very well could, given all the sabre-rattling that's going on."
Money managers raised their net long U.S. crude futures and options positions by 15,620 to 356,590 in the week to April 1, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. [CFTC/}
(Additional reporting by Christopher Johnson in London, Florence Tan and Manolo Serapio Jr in Singapore; Editing by William Hardy, David Evans, Steve Orlofsky, Diane Craft and Peter Galloway)