May 2 (Bloomberg) -- Crude oil rose more than $3 a barrel in New York, the most in a month, after a report showed that the U.S. lost fewer jobs than forecast in April and as Turkey renewed its military offensive against Kurdish rebels in Iraq.

Payrolls shrank by 20,000 workers and the jobless rate fell to 5 percent, from 5.1 percent in March, the Labor Department said. Economists surveyed by Bloomberg News projected a loss of 75,000 jobs. Turkish warplanes pounded suspected positions of the Kurdish Workers' Party, or PKK, in Iraq's oil-rich north.

``The unemployment number wasn't anywhere near as bad as expected,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``Maybe the economy isn't falling into the abyss and demand won't fall as much as expected.''

Crude oil for June delivery rose $3.80, or 3.4 percent, to settle at $116.32 a barrel at 2:41 p.m. on the New York Mercantile Exchange, the first increase in four days. It was the biggest gain since April 2. Futures, which have climbed 83 percent from a year ago, are down 1.9 percent this week.

Brent crude oil for June settlement rose $4.06, or 3.7 percent, to $114.56 a barrel on London's ICE Futures Europe exchange, the biggest increase since March 18. The contract touched a record $117.56 on April 25.

``News of the Turkish air attacks turned us around overnight, but it doesn't explain a $3 gain,'' said Tom Bentz, a broker at BNP Paribas in New York. ``More than any headline in particular, we are just seeing investors come in to take advantage of the dip in prices this week.''

Stronger Dollar

The dollar rose to a five-week high against the euro after the smaller-than-expected job loss last month, which may indicate the labor market is weathering the economic slowdown. When the dollar rises, commodities often fall because they lose appeal as a hedge against inflation. Oil touched a record $119.93 a barrel on April 28, as the dollar dropped.

``When prices fail to respond as expected to seemingly bearish news, this is seen as a buy signal by the funds,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates. ``The dollar is up and most commodities have shrugged it off. Also, if the employment numbers are this good, demand might hold up.''

The U.S. consumed almost a quarter of global oil production last year. U.S. gasoline use may drop this summer for the first time in 17 years because of the weak economy and high prices, the Energy Department said in an April 8 report.

Oil-Company Profits

Record oil prices pushed oil-company profits higher. Chevron Corp., the second-largest U.S. oil company, said first-quarter net income rose 9.5 percent to $5.17 billion, according to a statement today. Europe's two biggest oil companies, Royal Dutch Shell Plc and BP Plc, posted gains of 25 percent and 63 percent, respectively, the companies said on April 29.

The air raids on PKK camps around Kandil Mountain in northern Iraq began at 11:30 p.m. local time yesterday, the army said today on its Web site. Fighter planes returned to their bases safely and steps were taken to avoid civilian casualties, Turkey's military said.

Iraq's northern region is controlled by a semi-autonomous Kurdish administration. Kirkuk, at the center of the region's biggest oil field, is about 100 miles (161 kilometers) from the Turkish border.

Russia produced the least amount of oil in 18 months in April as aging fields and rising costs threaten the country with the first annual decline in oil output in a decade.

Production dropped to 9.72 million barrels a day, 0.8 percent less than in April last year and only slightly higher than in October 2006, according to data released today by CDU TEK for the Energy Ministry. Compared with March, output fell 0.4 percent. Russia is the world's second-biggest oil supplier.

OPEC Production

The Organization of Petroleum Exporting Countries won't consider increasing crude-oil production before it meets in September because the market is well supplied, Qatari Oil Minister Abdullah al-Attiyah said today in an interview in Beirut while attending the Arab Economic Forum. The 13-member group is responsible for more than 40 percent of the world's oil output.

``OPEC will not increase production of crude oil because what is happening now is not an increase in oil demand, but heavy speculation on oil futures,'' al-Attiyah said. ``That's what's making oil prices so high.''

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: May 2, 2008 15:53 EDT