NEW YORK Oil rose on Friday, clawing back from one of its biggest routs since the financial crisis, as upbeat U.S. jobs data and news of an Italian austerity plan offered hope for staving off a second recession that would dent energy demand.
An Iranian pipeline fire and a refinery fire in Memphis, Tennessee, underpinned prices, which rebounded modestly. For the week, U.S. crude fell 9 percent, its biggest weekly decline since early May.
Trade was volatile, with investors jittery over European finances and the U.S. economy. Wall Street stocks vacillated, but ended the day almost unchanged after rallying on news that Italy had pledged to speed up austerity measure in return for help with funding from the European Central Bank.
Iran's OPEC governor said OPEC ministers will meet if prices keep falling.
"Brent and U.S. refined products are seeing a relief rally, while (U.S. crude) remains more detached from the world markets," said Tom Bentz, director at BNP Paribas Commodities Futures Inc in New York.
ICE Brent crude for September rose $2.12 to settle at $109.37 a barrel, having jumped to $110.26 in reaction to the jobs data. For the week, Brent slumped 6.3 percent, having touched a nearly six-week low of $104.30 on Thursday.
U.S. September crude rose 25 cents to settle at $86.88 a barrel, ending a five-day string of losses, though it continued to see-saw near flat in post-settlement trading.
The settlement was well off a $88.32 peak reached after the jobs report, having bounced off previous session trough of $82.87, the lowest since November 26, 2010.
U.S. gasoline and heating oil futures rose on Friday on Brent's strong rebound and news that a fire caused by a heating unit on one crude unit had shut Valero Energy Corp's (VLO.N) 180,000-bpd Memphis, Tennessee refinery.
Brent and U.S. oil had initially rallied immediately after the Labor Department said nonfarm payrolls increased by 117,000 last month, above market expectations, as private employers stepped up hiring.
"A quick glance at the latest jobs report shows it is positive, better than expected. But whether the market will be able to stem its downslide after the recent stream of negative economic data remains to be seen," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
But ultimately the jobs data was viewed as insufficient to alleviate concerns about slower U.S. growth. .N
Italian Prime Minister Silvio Berlusconi added to the market's collective sense of relief by saying Italy would accelerate cuts to aim for a balanced budget in 2013 and press ahead with welfare and labor market reforms.
IRAN PIPELINE BLAST
News of an Iranian pipeline explosion that shut flows of up to 40,000 barrels per day lifted oil prices from early lows. But Iran, the second-largest OPEC producer after Saudi Arabia, later said it was pumping oil at full capacity.
(Additional reporting by Gene Ramos in New York, Alex Lawler in London and Alejandro Barbajosa in Singapore; Editing by Dale Hudson and David Gregorio)