Investing.com — Crude oil prices weakened Friday after softer-than-expected U.S. employment data raised fears that the U.S. economy is weakening even as the Federal Reserve is expected to tighten monetary policy again this year, to the detriment of economic activity.
By 09:20 ET (13:20 GMT), the contract dropped 0.2% to $76.36, while futures traded 0.4% lower at $71.53 a barrel.
June nonfarm payrolls disappoint
The U.S. economy added jobs at a slower-than-anticipated pace in June, as the Labor Department’s closely watched Friday showed that nonfarm payrolls rose by 209,000 last month, cooling from a downwardly revised mark of 306,000 in May.
Economists had expected the figure to increase by 225,000.
Even as the labor market shows signs of deteriorating, the is still widely expected to increase interest rates once more later this month, after pausing its tightening cycle last month.
Worries that more interest rate hikes could send the world’s largest economy into recession have weighed heavily on the crude markets.
Crude on course for positive week on U.S. draw
That said, both benchmark oil contracts are on course for a second consecutive positive week following a larger-than-expected fall in U.S. oil stocks, suggesting resilient demand by the largest consumer of crude in the world.
Official data from the , released on Thursday, showed that U.S. inventories shrank by 1.5 million barrels, more than expected in the week to June 30, with a bigger-than-expected drop in indicating improved fuel demand amid the travel-heavy summer season.
Also helping the tone this week was the announcement that major oil exporters Saudi Arabia and Russia, as well as Algeria, announced fresh output cuts to support prices, with the additional reductions equating to 5% of global oil demand.
The week ends with the oil rigs count, as well as positioning data.
The CFTC data last week showed that speculators reduced their net long positions in both the ICE Brent and Nymex WTI contracts, driven by a combination of longs liquidating and fresh shorts entering the market.
This resulted in “the smallest net long speculators have held in WTI since March when we saw prices trading briefly below US$65/bbl,” said analysts at ING, in a note.
Read the full article here
