Oil Prices Fall Amid Weak U.S. Jobs Data

By Nicole Jao

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

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

For the week, Brent declined 10%, while WTI decreased around 8%.

U.S. government data revealed that employment rose less than expected in August. However, the jobless rate decreased to 4.2%, indicating a mild slowdown in the labor market that may not lead to significant interest rate cuts by the Federal Reserve this month.

Bob Yawger, executive director of energy futures at Mizuho, stated, "The jobs report was a little soft and implied that the economy in the U.S. is on the slide." Concerns surrounding Chinese demand also contributed to the downward pressure on oil prices.

On Thursday, Brent settled at its lowest since June 2023, despite U.S. inventory withdrawals and OPEC+'s decision to postpone planned oil output increases. U.S. crude stockpiles decreased by 6.9 million barrels to 418.3 million barrels, exceeding analysts' projections of a 993,000 barrels decline.

Additionally, signals indicating that rival factions in Libya may be closer to resolving disputes affecting crude exports added to the downward pressure this week. Although exports remained mainly halted, some loadings have been permitted from storage.

Bank of America revised its Brent price forecast for the second half of 2024 downward to $75 a barrel from nearly $90, owing to increased global inventories, slower demand growth, and the OPEC+ spare production capacity.

The U.S. active oil rig count, an early indicator of future output, remained stable at 483 this week, as reported by energy services firm Baker Hughes.

Money managers reduced their net long U.S. crude futures and options positions in the week ending Sept. 3, according to the U.S. Commodity Futures Trading Commission (CFTC) on Friday.