Oil settles down, posts weekly loss as geopolitical risk premium ebbs
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[November 04, 2023] By
Laura Sanicola
(Reuters) - Oil prices settled more than 2% lower on Friday as supply
concerns driven by Middle East tensions eased, while jobs data raised
expectations the U.S. Federal Reserve could be done hiking interest
rates in the biggest oil consuming economy.
Brent crude futures were down $1.92, or 2.3%, to $84.89 a barrel. U.S.
West Texas Intermediate crude futures fell $1.95, or 2.4%, to $80.51 a
barrel.
Both benchmarks settled down more than 6% on the week.
Hezbollah leader Sayyed Hassan Nasrallah, speaking for the first time
since the Israel-Hamas war erupted, warned on Friday that a wider
conflict in the Middle East was possible but did not commit to opening
another front on Israel's border with Lebanon.
"The market is taking this conflict in its stride, as it looks to be
neither a significant demand or supply disruption event," said John
Kilduff, partner at Again Capital LLC in New York.
U.S. job growth slowed more than expected in October, official data
showed, while wage inflation cooled, pointing to an easing in labor
market conditions.
The data bolstered the view that the Federal Reserve need not raise
interest rates further.
The Fed held interest rates steady this week, while the Bank of England
kept rates at a 15-year peak, supporting oil prices as some risk
appetite returned to markets.
But a private sector survey on Friday showed that while China's services
activity expanded at a slightly faster pace in October, sales grew at
the softest rate in 10 months and employment stagnated as business
confidence waned.
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General view of Neste's oil refinery, with a total refining capacity
of about 13.5 million tonnes per year, in Porvoo, southern Finland,
November 17, 2015.REUTERS/Jussi Rosendahl/File Photo
The data followed a reading from the National Bureau of Statistics
on Wednesday that showed China's manufacturing activity unexpectedly
contracted in October.
On the supply side, Saudi Arabia is expected to reconfirm an
extension of its voluntary oil output cut of 1 million barrels per
day through December, based on analyst expectations.
The U.S. House of Representatives easily passed a bill to bolster
sanctions on Iranian oil in a strong bipartisan vote, but it was
unclear how effective the legislation would be if signed into law.
While Congress can pass sanctions legislation, such measures often
come with national security waivers that allow presidents discretion
in applying the law.
China could also continue to import the oil despite new sanctions.
U.S. energy firms this week cut the number of oil and natural gas
rigs operating to their lowest since February 2022, energy services
firm Baker Hughes said on Friday.
(Additional reporting by Ahmad Ghaddar in London; Jeslyn Lerh in
Singapore; editing by Jason Neely, Kirsten Donovan, David Gregorio
and Louise Heavens)
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