THE price of oil shot to a 16-month high yesterday on signs the US job market is improving, although not by enough to prompt the Federal Reserve to pull back on its bond-buying program.

Benchmark crude for August delivery rose US$1.56 to finish at US$108.04 a barrel, the highest close since March 19, 2012, on the New York Mercantile Exchange.

Oil has jumped more than US$11 a barrel in July, and pushed up the price of gasoline along with it. Gasoline futures have gained 13 percent since July 1.

Yesterday US economic news was good on two fronts: The Labor Department reported a drop in claims for unemployment benefits and the Federal Reserve Bank of Philadelphia said manufacturing activity in the mid-Atlantic region grew in July at the fastest pace in more than two years.

Oil markets are also getting support this week from comments by Ben Bernanke that the Fed will support the US economy as long as necessary. The Fed chairman told lawmakers in appearances Wednesday and yesterday that there was no preset schedule for ending the existing stimulus program, raising hopes it may not end as quickly as some had feared.

In London, Brent crude rose 9 cents to US$108.70 a barrel on the ICE Futures exchange.

In other energy futures trading on Nymex:

- Wholesale gasoline was flat at US$3.11 a gallon.

- Heating oil rose 3 cents to US$3.10 a gallon.

- Natural gas added 18 cents to US$3.81 per 1,000 cubic feet.