Oil prices fall sharply amid weak U.S. job growth, demand concerns
(MENAFN) Oil prices experienced a significant drop of over 2 percent on Friday, following weaker-than-expected U.S. job growth data for August. Both brent and U.S. crude futures saw substantial declines, driven by ongoing concerns about global demand that overshadowed the recent OPEC+ decision to delay planned production increases. Brent crude futures fell by USD1.63, or 2.24 percent, to close at USD71.06 per barrel, while U.S. crude futures dropped USD1.48, or 2.14 percent, ending at USD67.67 per barrel. The decline marked a weekly downturn of nearly 10 percent for Brent and about 8 percent for West Texas Intermediate (WTI) crude, highlighting the market's bearish sentiment.
The drop in oil prices occurred despite U.S. government data indicating a mixed picture of the labor market. While the number of jobs added in August fell short of expectations, the unemployment rate dipped to 4.2 percent, suggesting a controlled slowdown that might not necessitate a significant rate cut by the U.S. Federal Reserve this month. Despite a reduction in U.S. crude inventories, which fell by 6.9 million barrels to 418.3 million barrels last week (exceeding analysts' expectations for a much smaller decline), oil prices continued to slide. This decline reached its lowest level since June 2023 for Brent crude as market participants weighed the potential for ongoing weak demand.
Additional factors contributing to the negative sentiment in the oil market included signs of progress in negotiations between rival factions in Libya, which could potentially lead to the resumption of the country’s disrupted oil exports. Reflecting these developments, Bank of America lowered its forecast for Brent crude prices in the second half of 2024, adjusting the expected price from USD90 to USD75 per barrel. The bank cited a combination of factors, including an accumulation of global oil inventories, sluggish demand growth, and spare production capacity within OPEC+, as reasons for the downward revision in its price outlook.
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