(Reuters) - Oil prices rose on Friday after weaker than expected U.S. jobs data intensified expectation that the Federal Reserve would embark on another round of money printing to boost the economy.
In choppy trade, Brent crude oil futures rose 81 cents to $114.30 per barrel by 8:57 a.m. EDT (1257 GMT). U.S. crude rose 80 cents to $96.33.
Nonfarm payrolls increased by only 96,000 last month, the Labor Department said on Friday, below the forecast rise of 125,000. While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, it was largely due to Americans giving up the search for work.
"The data was dismal and it increases the likelihood of quantitative easing next week," said David Morrison, analyst at GFT Global.
POSSIBLE SPR RELEASE
Traders were also watching for a possible release of emergency oil reserves by the United States and other major economies, which could lead to downward pressure on prices.
U.S. government officials met oil market experts on Thursday as the White House considers the merits of another release.
Government officials did not reveal any plans to tap the Strategic Petroleum Reserve (SPR), but voiced concern about tightening U.S. fuel supply and sounded out experts on how energy prices could behave in coming months, sources said.
Analysts said that while the threat of an SPR release was crimping prices, the effect of such a move was not yet reflected in prices.
"The SPR chatter is also probably not helping the front Brent spreads although Brent-WTI is not really pricing-in yet a SPR release," said Olivier Jakob, at Petromatrix in Zug, Switzerland.
U.S. crude oil stockpiles fell more sharply than forecast last week as Hurricane Isaac hit the U.S. Gulf region and temporarily shut down production platforms, refineries and ports, government data showed on Thursday.
Domestic stocks of crude, excluding oil held in the SPR, fell 7.43 million barrels to 357.1 million in the week ended August 31, the Energy Information Administration reported. Analysts in a Reuters poll had forecast a drop of 5.3 million.
Energy production restarts continued in the Gulf of Mexico after Hurricane Isaac.
Concern that violence in the Middle East could escalate and threaten flows of oil from the region, a factor that has underpinned recent strength in oil prices, returned to the fore.
A blast outside a mosque in Syria's capital on Friday killed five security personnel and wounded several others, state television said.
Britain's Foreign Secretary William Hague urged the European Union on Friday to impose new sanctions on Iran over its nuclear program, as Israel continues to threaten military action.
"We once again stress most emphatically that the risk of a geopolitical spike remains ever-present and near-chronic," SEB analyst Filip Petersson said in a note to clients.
(Additional reporting by Jessica Jaganthan in Singapore; editing by James Jukwey)
