U.S. employment data has been weaker than expected, staying on course for the strongest weekly loss in three months, and oil prices stabilized Friday, May 3. Concerns about demand and high interest rates remain.
At 1:15 p.m. GMT Brent futures for July were up 17 cents, or 0.2 percent, at $83.84 a barrel. U.S. West Texas Intermediate crude for June was up 6 cents, or 0.1 percent, at $79.01 a barrel.
Investors are concerned rising long-term interest rates could dampen economic growth in the United States and elsewhere, causing the two benchmarks to suffer weekly losses. The U.S. is the world-largest oil consumer.
Brent went down about 6 percent and WTI a 5.4 percent loss in one week.
Analysts at JP Morgan stated: “We view the commodity sell-off of the past two days as collateral damage from the Fed’s repricing and non-fundamental in nature.”
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Data showed U.S. job growth slowed more than expected and in April and annual wage gains also cooled. This prompted traders to increase bets the Federal Reserve will make its first interest rate cut in September this year.
The Fed held rates steady this week, signaling high inflation readings that could delay rate cuts. Usually, rising rates weigh on the economy and can reduce demand for oil.
Also on May 3, energy services company Baker Hughes will release its weekly report regarding oil and gas rigs. That report is an indicator of future crude oil production from the world’s top producers.
The war between Israel and Hamas has seen diminishing geopolitical risk premiums, as the two sides have held talks with international mediators and are considering a temporary ceasefire.
Barbara Lambrecht, an analyst at Commerzbank stated: “Hopes for a ceasefire and a sharp rise in U.S. crude inventories have caused the price of a barrel of Brent to slip below $85.”
Statements coming from three sources of OPEC+ group made it clear that if oil demand does not increase, they may extend voluntary production cuts beyond June.
OPEC+ oil producers are members of the Organization of the Petroleum Exporting Countries and their allies, including Russia. They are scheduled to meet on June 1.
“April stockpiles will turn into extractions from May through August and may push prices toward $90 in September,” said JP Morgan, which expects OPEC+ to extend cuts beyond June.
Reuters contributed to this report.
