Oil settles down 2%; big weekly drop after US jobs data

Oil prices settled 2 per cent lower on Friday (Sep 6), with a big weekly loss after data US jobs data was weaker than expected in August, which outweighed price support from a delay to supply increases by Opec+ producers.

Brent crude futures were down US$1.63, or 2.24 per cent, to US$71.06 a barrel, their lowest level since December 2021. US West Texas Intermediate crude futures fell US$1.48, or 2.14 per cent, to US$67.67, their lowest since June 2023.

For the week, Brent declined 10 per cent, while WTI dropped around 8 per cent.

US government data showed employment increased less than expected in August, but a drop in the jobless rate to 4.2 per cent suggested an orderly labour market slowdown that may not warrant a big interest rate cut from the Federal Reserve this month.

“The jobs report was a little soft and implied that the economy in the US is on the slide,” Bob Yawger, executive director of energy futures at Mizuho.

Concerns around Chinese demand also kept pressuring oil prices, Yawger said.

On Thursday, Brent settled at its lowest since June 2023 despite a withdrawal from US oil inventories and a decision by Opec+ to delay planned oil output increases.

US crude stockpiles fell by 6.9 million barrels to 418.3 million barrels last week, compared with a projected decline of 993,000 barrels in a Reuters poll of analysts.

Signals that Libya’s rival factions could be closer to an agreement to end the dispute that has halted the country’s crude exports also pressured oil prices this week. Exports remained mostly shut in but some loadings have been permitted from storage.

Bank of America lowered its Brent price forecast for the second half of 2024 to US$75 a barrel from almost US$90 previously, it said in a note on Friday, citing building global inventories, weaker demand growth and Opec+ spare production capacity.

The US active oil rig count, an early indicator of future output, remained unchanged at 483 this week, energy services firm Baker Hughes reported on Friday.

Money managers cut their net long US crude futures and options positions in the week to Sep 3, the US Commodity Futures Trading Commission said on Friday. REUTERS