Oil fell nearly 3% to a three-week low on Friday in a volatile session after strong US jobs data raised concerns about higher interest rates and investors sought more clarity about the EU’s impending embargo on Russian refining products.
Brent crude futures fell $2.23, or 2.7%, to $79.94 a barrel after hitting session highs of $84.20. It fell to $79.72, its lowest level since Jan.
West Texas Intermediate crude (WTI) was down $2.49, or 3.3%, to close at $73.39 after trading between $78.00-$73.13, its lowest level since Jan.
Brent is down 7.8% this week, while WTI is down 7.9%.
U.S. job growth accelerated sharply in January with a persistently resilient labor market, but further moderation in wage increases could give the Federal Reserve some relief in its fight against inflation.
The market can’t decide whether it should be staying tense amid fears of a recession or be more cautious about the Federal Reserve being aggressive on interest rates.
The US central bank raised rates on Wednesday at a more moderate rate than last year, but policymakers expect continued increases in borrowing costs.
It is predicted that increases in interest rates in 2023 will put pressure on the US and European economies, raising fears of an economic slowdown that will likely reduce global crude oil demand.
The EU’s Swedish presidency said on Friday that European Union countries have agreed to set a ceiling price for Russian refined petroleum products.
EU diplomats said the cap is $45 per barrel for discounted products such as oil and naphtha, and $100 per barrel for products traded at a higher price than crude oil, especially diesel.
The Kremlin said Russia’s EU embargo on refined petroleum products would lead to further imbalances in global energy markets.
Analysts saw a sharp increase in traffic in 15 of China’s largest cities after the Lunar New Year holiday, but say Chinese traders were relatively inactive.
In U.S. supply, energy firms this week cut the number of oil and natural gas rigs by the most since June 2020, Baker Hughes Co said. U.S. oil rigs fell 10 to 599 this week, their lowest since September, while gas rigs dropped by two to 158.
