NEW YORK (CNNMoney.com) -- Oil prices rose to a new 17-month high Thursday after jobs reports painted a picture of improving, although still high, unemployment in the U.S.
What prices are doing: Crude oil prices for May delivery rose $1.11, settling at $84.87 a barrel on Thursday. Prices reached a high of $85.22 during mid-day trading.
Oil prices are at their highest since Oct. 9, 2008 when crude settled at $86.59.
What's moving the market: Strong demand from China, India and the Middle East has driven oil prices up recently, analysts say. Reports on Thursday showed stronger-than-expected manufacturing growth in China in March, boosting investors' confidence that demand from the Asian country will continue, if not increase.
Meanwhile, three jobs reports released Wednesday and Thursday also lead investors to believe the Federal Reserve will continue to keep interest rates near zero for an extended time period. That news typically drives the dollar down and oil prices up. Since crude oil is priced in the U.S. currency, a weaker dollar makes oil a more attractive investment for foreigners.
Job cuts surged 61% in March, a report by Challenger, Gray & Christmas Inc. said Thursday. A separate report on Wednesday showed that private-sector employers continued to cut jobs in March, although at their lowest levels since February 2008.
A third report, released Thursday, showed unemployment insurance claims fell last week to their lowest level since August 2008.
In a speech Wednesday morning, President Obama announced he will open new areas for offshore drilling. Prices rose on Wednesday, nearing the $84 mark, on initial euphoria reacting to the plan, which over time, would lessen U.S. dependency on foreign oil.
What analysts are saying: Oil prices are trading higher Thursday, primarily on the news from the jobs reports, not necessarily because of supply and demand concerns, said Phil Flynn, a senior market analyst with PFG Research said.
"The biggest thing that could bring prices down now, is a good jobs number," he said.
Bullish investors are also looking for strong demand from China as a sign to move prices higher. "Explosive" manufacturing growth numbers out of China on Thursday -- as well as statements from China's government signaling that the country is not going to boost the value of its currency to rein in inflation -- are renewing investors' confidence in continued demand from the country, Flynn said.
Looking ahead: Tomorrow's latest government jobs report will take center stage even though the U.S. markets close for Good Friday.
If jobs post a better-than-expected number, oil could drop by as much as $5, if not more, immediately, Flynn said.
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