NEW YORK (CNNMoney.com) -- Oil prices rose Friday following a better than expected employment report from the government, boosting optimism about recovering fuel demand.
What prices are doing: Light, sweet crude oil for April delivery climbed $1.29, or 1.6%, to settle at $81.50 a barrel Friday.
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That's the highest closing price since Jan. 11, when crude settled at $82.52.
On Thursday, oil prices edged lower on a stronger dollar after a worse-than-expected drop in home sales contracts and as investors looked ahead to Friday's jobs data.
Earlier in the week, oil rose as investors became more optimistic about a solution for Greece's massive debt, and prices crossed $80 a barrel after Greece announced a plan to cut its deficit.
What's driving prices: Investors welcomed a government report showing that fewer jobs were lost last month than expected.
The Labor Department said 36,000 jobs were lost in February and the unemployment rate was unchanged at 9.7%.
Economists surveyed by Briefing.com expected the report to show a loss of 63,000 jobs last month. The unemployment rate in February was forecast to rise to 9.8% from 9.7% in January.
Oil was also boosted by stocks, which rallied Friday. Oil traders view the stock market as a leading indicator of economic growth and potential energy demand. As a result, oil prices often follow the major stock indexes.
What analysts are saying: "There's a disconnect between reality and the market right now," said James Williams, president and energy economist at WTRG Economics. "And the dollar has been trading as a financial asset rather than on fundamental supply and demand."
He said that any drop in jobs means that fewer people have money to put into oil, so prices should fall. Therefore, the fact that oil rose because the drop was less than expected shows that oil is following equities.
Williams said he wouldn't be surprised if oil climbs to $85 a barrel in the next couple months. But, once it hits that level, he expects Saudi Arabia to boost oil production in order to bring prices back down.
"I don't think Saudi Arabia really wants prices above $80," he said. "They do want more revenue, but they know that in the long term, high oil prices means that their market share of energy decreases because people will turn to alternative fuels."
Gasoline prices: The national average for a gallon of regular unleaded gasoline rose to $2.720, up 1.4 cents from the previous day's price of $2.706, according to motorist group AAA. 
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Today's featured rates:
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,454.83 | -74.92 | -0.60% |
| Nasdaq | 2,837.53 | -1.85 | -0.07% |
| S&P 500 | 1,317.82 | -2.86 | -0.22% |
| Treasuries | 1.74 | -0.01 | -0.80% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.15 | 0.01 | 0.14% |
| Sprint Nextel Corp | 2.62 | 0.09 | 3.56% |
| Cisco Systems Inc | 16.33 | -0.06 | -0.37% |
| Chesapeake Energy Co... | 15.81 | 0.23 | 1.48% |
| Ford Motor Co | 10.60 | 0.01 | 0.09% |
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