* Fed Chairman Bernanke more hopeful recovery is sustainable
* U.S. Dec jobless rate falls, job creation below forecasts
* U.S. crude, Brent correlation breaks down
(Updates with data, prices)
By Zaida Espana
LONDON, Jan 7 (Reuters) - U.S. crude oil futures rose above
$89 a barrel in volatile trade on Friday as the Federal Reserve
Chairman Ben Bernanke made cautiously optimistic comments about
a recovery, after data showed U.S. unemployment rate fell.
"We have seen increased evidence that a self-sustaining
recovery in consumer and business spending may be taking hold,"
the central bank chief said in his first testimony to Congress
since the Fed launched a controversial plan to buy an additional
$600 billion in government bonds.
The remarks followed data showing the U.S. labour market
created 103,000 new jobs in December, below analysts' forecasts
for 175,000. []
U.S. crude <CLc1> futures rose 74 cents to $89.12 a barrel
by 1510 GMT, after reversing losses that followed the jobs data.
"The employment data is disappointing, especially in light
of the enthusiasm that emerged earlier in the week on the ADP
employment data," John Kilduff, partner at Again Capital LLC in
New York said.
"However, the decided downtick in the unemployment rate is
reassuring. In terms of energy prices, more robust employment
gains are necessary to sustain the price levels seen of late.
Unemployment remains at a level that will challenge the ability
of $3.00-plus per gallon gasoline to persist," he added.
BRENT, U.S. CRUDE DISCONNECT
In a rare market move, the price of Brent and U.S. crude
futures went in opposite directions during the trading session.
February Brent crude contracts <LCOc1> were 35 cents upt at
$94.17 a barrel by 1512 GMT, having tested highs of $96.17 a
barrel during a rally this week on the back of index
rebalancing. []
Analysts said the price differential between Brent and U.S.
crude contracts -- also known as West Texas Intermediate (WTI)
-- remained exceptionally high and should tighten over the
coming weeks.
"It seems WTI prices have found a bottom, and the huge price
differential between Brent and WTI, the highest since 2009,
looks excessive," Commerzbank analyst Carsten Fritsch said.
"The price differential should narrow, meaning Brent should
decline and WTI increase somewhat in the coming weeks."
U.S. crude prices have had a turbulent first week of the
year, seesawing in a range of almost $5 between 27-month highs
of $92.58 a barrel on Monday and lows of $88.38 on Thursday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of Brent/WTI spread:
http://link.reuters.com/taj25r
Graphic of Brent/WTI correlation:
http://link.reuters.com/vev25r
John Kemp column on Brent vs WTI: []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
A jump last week in crude stored at the Cushing, Oklahoma
hub, the delivery point for WTI, caused the U.S. benchmark grade
to trade at a discount of around $6.50 a barrel on Thursday.
"The driving factor for this decline was once again concerns
about the storage situation at the delivery point in Cushing,
with the discount to ICE Brent widening," JBC Energy consultants
said in a note on Friday.
On the Brent front, the price strength, robust trading
volumes and market structure have helped to lure some of the big
investment money that has typically favoured U.S. oil futures.
[]
Brent's premium over U.S. crude was at $5.14 per barrel by
1446 GMT, down slightly from a seven-month high on Thursday.
"We doubt that such a large spread will be sustainable,"
Credit Suisse analysts including Stefan Graber said. "With the
end of the winter season in February-March, energy prices may
face further downward pressure."
(Additional reporting by Robert Gibbons in New York and
Alejandro Barbajosa and Florence Tan in Singapore; editing by
James Jukwey)
