Oil prices rose more than 1% on Friday after better-than-expected US jobs data, but both benchmarks fell more than 3% in the week amid tensions over the US rate hike.
Brent crude rose $1.19, or 1.5%, to $82.78 a barrel. West Texas Intermediate crude (WTI) was up 96 cents, or 1.3%, at $76.68.
Expectations of further rate hikes in the world’s largest economy and in Europe overshadowed the global growth outlook and pushed both crude benchmarks down this week.
However, the Federal Reserve may have less reason to raise interest rates as aggressively as some fear, after a government report released on Friday revived hopes of reducing inflation amid signs that the labor market disrupted by the COVID-19 pandemic is returning to normal.
However, Fed Chairman Jerome Powell continues to warn of higher and potentially faster rate hikes, and that it is wrong for the central bank to initially think inflation is “temporary.” The next monetary policy meeting is scheduled for March 21-22.
Oil prices fluctuate on renewed fears of a Fed rate hike. The stronger dollar makes oil more expensive for holders of other currencies.
Global stocks, which often move with oil prices, hit a two-month low as investors turned away from banks.
Broader U.S. employment data for February beat expectations with 311,000 rising nonfarm jobs compared to 205,000 new jobs expected, according to a survey. This will likely push the Fed to raise interest rates for longer, putting pressure on oil prices, analysts say.
On the supply side, major oil producers Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries, re-established ties after talks.
U.S. oil rigs fell 2 percent this week to 590, their lowest level since June, according to data from Baker Hughes.
The United States reportedly specifically urged some commodity traders to address their concerns about Russian oil, whose shipping prices skyrocketed, to support supply.
Investors are closely watching Russia’s export cuts, which decided to cut oil production by 500,000 barrels a day in March.
On Thursday, the US issued a budget that would shelve billions of dollars in oil and gas industry subsidies.
The U.S. Commodity Futures Trading Commission (CFTC) said money managers were cutting their net long-term crude oil futures and options positions in the U.S. in the week leading up to February 21.