Oil falls more than 2% after US jobs data, set for weekly drop

NEW YORK: Oil fell more than 2% on Friday after data showed U.S. employment increased less than expected in August, and was on track for a heavy weekly loss as demand concerns outweighed a delay to supply increases by OPEC+ producers.

Brent crude futures were down $1.62, or 2.23%, to $71.07 a barrel by 12:05 p.m. EDT (1605 GMT). U.S. West Texas Intermediate crude futures were down $1.52, or 2.2%, at $67.63.

For the week, Brent was on course to register a 10% decline, while WTI was heading for a drop of around 8%.

U.S. government data on Friday showed employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown continued and probably did 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 U.S. is on the slide,” Bob Yawger, executive director of energy futures at Mizuho.

Concerns around Chinese demand also continued to pressure oil prices, Yawger said.

Oil prices up on big storage withdrawal

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

U.S. crude stockpiles fell by 6.9 million barrels to418.3 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 oil exports also pressured oil prices this week.

Exports remain 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 $75 a barrel from almost $90 previously, it said in a note on Friday, citing building global inventories, weaker demand growth and OPEC+ spare production capacity.