Oil Prices Decline amid Weak U.S. Jobs Data

By Nicole Jao

NEW YORK (Reuters) – Oil prices settled 2% lower on Friday, experiencing a significant weekly loss after U.S. jobs data for August came in weaker than expected. This overshadowed the price support provided by a delay in supply increases by OPEC+ producers.

Brent crude futures fell by $1.63, or 2.24%, to $71.06 a barrel, the lowest level since December 2021. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures dropped by $1.48, or 2.14%, to $67.67, marking their lowest since June 2023.

Over the week, Brent prices declined by 10%, while WTI saw an approximate drop of 8%.

U.S. government data indicated that employment rose less than expected in August, but a drop in the jobless rate to 4.2% suggested a manageable slowdown in the labor market. This may not necessitate a significant interest rate cut from the Federal Reserve this month.

Bob Yawger, executive director of energy futures at Mizuho, noted, “The jobs report was a little soft and implied that the economy in the U.S. is on the slide.” Concerns regarding demand from China also continued to exert downward pressure on oil prices.

On Thursday, Brent prices settled at their lowest since June 2023, despite a decrease in U.S. oil inventories and OPEC+ delaying planned output increases.

U.S. crude stockpiles decreased by 6.9 million barrels to 418.3 million barrels last week, surpassing analysts’ expectations of a decline of 993,000 barrels.

Additionally, indications that rival factions in Libya may be approaching an agreement to resolve disputes affecting the country’s crude exports also pressured oil prices this week. While exports mostly remained halted, some loadings have been allowed from storage.

Bank of America revised its Brent price forecast for the second half of 2024 down to $75 a barrel, from almost $90 previously, citing rising global inventories, weaker demand growth, and available OPEC+ production capacity.

The U.S. active oil rig count, a preliminary indicator of future output, remained stable at 483 this week, according to a report from energy services firm Baker Hughes.

Furthermore, money managers decreased their net long positions in U.S. crude futures and options for the week ending September 3, as reported by the U.S. Commodity Futures Trading Commission (CFTC).