Oil prices fall, head for steepest weekly drop
- By Reuters -
- May 03, 2024
Oil prices edged lower on Friday, on course for their steepest weekly loss in three months, as investors weighed weaker-than-expected U.S. jobs data and the timing of a Federal Reserve interest rate cut.
Brent crude futures for July were down 29 cents, or 0.35%, to $83.38 a barrel at 11:30 a.m EDT (1530 GMT). U.S. West Texas Intermediate crude for June fell 37 cents, or 0.47%, to $78.58 per barrel.
Both benchmarks are set for weekly losses as investors are concerned that higher-for-longer interest rates will curb economic growth in the U.S., the world’s leading oil consumer, as well as in other parts of the world.
Brent was on course for a weekly decline of about 6.8% while WTI was headed for a loss of 6.4% on the week.
U.S. job growth slowed more than expected in April and the annual wage gain cooled, data showed on Friday, prompting traders to raise bets that the U.S. central bank will deliver its first interest rate cut this year in September.
“The economy is slowing a little bit,” said Tim Snyder, economist at Matador Economics. “But (the data) gives a path forward for the Fed to have at least one rate cut this year,” he said.
The Fed held rates steady this week and flagged high inflation readings that could delay rate cuts. Higher rates typically weigh on the economy and can reduce oil demand.
The market is repricing the expected timing of possible rate cuts after the release of softer-than-expected monthly jobs data, said Giovanni Staunovo, an analyst at UBS.
Energy services firm Baker Hughes on Friday is due to release its weekly count of oil and gas rigs, an indicator of future crude output from the world’s top producer.
Geopolitical risk premiums due to the Israel-Hamas war have faded as the two sides consider a temporary ceasefire and hold talks with international mediators.
Further ahead, the next meeting of OPEC+ oil producers – members of the Organization of the Petroleum Exporting Countries and allies including Russia – is set for June 1.
Three sources from the OPEC+ group said it could extend its voluntary oil output cuts beyond June if oil demand does not increase.