Oil prices rise after buoyant U.S. payrolls
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[March 11, 2023] By
Arathy Somasekhar
HOUSTON (Reuters) -Oil prices climbed more than 1% on Friday after
better-than-expected U.S. employment data, though both benchmarks fell
more than 3% on the week on U.S. interest rate hike jitters.
Brent rose $1.19, or 1.5%, to $82.78 a barrel. U.S. 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 have clouded the global growth outlook and driven both crude
benchmarks down this week.
However, the U.S. Federal Reserve may have less reason to raise interest
rates as aggressively as some had feared, after a government report on
Friday rekindled hopes of easing inflation amid signs the
pandemic-disrupted labor market is normalizing.
Fed Chair Jerome Powell has warned of higher and potentially faster rate
hikes, saying the central bank was wrong in initially thinking inflation
was "transitory". Its next monetary policy meeting is planned for March
21-22.
"Oil prices are fluctuating wildly on renewed fears of Fed interest rate
increases," said Price Group analyst Phil Flynn.
A strengthening dollar is also making oil more expensive for holders of
other currencies.
Global shares, which often move in tandem with oil prices, hit a
two-month low as investors dumped banks.
Broader U.S. employment data for February beat expectations with nonfarm
payrolls rising by 311,000, compared with expectations of 205,000 jobs
added, according to a Reuters survey. This is likely to ensure that the
Fed will raise interest rates for longer, which analysts have said would
weigh on oil prices.
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A container ship sails along Nakhodka
Bay near the oil terminal in the port city of Nakhodka, Russia
August 12, 2022. REUTERS/Tatiana Meel
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 days of previously undisclosed talks in
Beijing.
U.S. oil rigs fell by 2 to 590 this week, their lowest since June,
according to data from Baker Hughes.
The United States was reported to have privately urged some
commodity traders to shed concerns about shipping price-capped
Russian oil in a bid to shore up supply.
Investors are closely monitoring export cuts from Russia, which
decided to trim oil output by 500,000 barrels per day in March.
On Thursday, U.S. President Joe Biden proposed a budget that would
scrap billions of dollars in oil and gas industry subsidies.
Money managers cut their net long U.S. crude futures and options
positions in the week to Feb. 21, the U.S. Commodity Futures Trading
Commission (CFTC) said.
(Additional reporting by Shadia Nasralla, Sudarshan Varadhan and
Muyu Xu in Singapore; Editing by Louise Heavens, Emelia
Sithole-Matarise and David Gregorio)
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