Oil prices fell on Friday, posting their steepest weekly loss in three months, as investors weighed weak U.S. employment data and the likely timing of a Fed rate cut.
July Brent crude futures fell 71 cents, or 0.85%, to $82.96 a barrel. WTI crude oil fell 84 cents, or 1.06%, to $78.11 a barrel in June.
Investors are concerned that high borrowing costs in the United States, the world’s leading oil consumer, will limit economic growth in the long term after the Fed decided to keep interest rates steady this week.
On a weekly basis, Brent fell more than 7%, while WTI fell 6.8%.
U.S. job growth slowed more than expected in April, and Friday’s data added to a cooling of annual wage growth that has caused investors to raise bets that the U.S. central bank will make its first interest rate cut this year in September.
The Fed kept interest rates steady this week and cited high inflation indicators that could delay rate cuts. Higher rates often burden the economy and can reduce the oil demand.
The market repriced the expected timing of possible interest rate cuts following the release of weaker-than-expected monthly employment data.
U.S. energy companies this week reduced the number of oil and gas rigs operating for the second consecutive week to the lowest level since January 2022, Baker Hughes said.
The number of oil and gas rigs, an early indicator of future production, fell by eight to 605 in the week to May 3, the biggest weekly decline since September 2023. The oil rig count fell by seven this week to 499, as the biggest weekly decline since November 2023.
The geopolitical risk premiums of the Israel-Hamas war have diminished due to talks by international mediators.
The next meeting of OPEC+ oil producers, members of the Organization of the Petroleum Exporting Countries, and their allies including Russia, will be held on June 1.
Voluntary oil production cuts could be extended until after June if oil demand does not increase, sources said.
The U.S. Commodity Futures Trading Commission (CFTC) said money managers reduced their net long U.S. crude futures and options positions through April 30.
