Oil surges after strong U.S. jobs data
Oil prices rose on Friday after strong U.S. jobs data, but were still set for weekly falls as investors sought more clarity on the imminent EU embargo on Russian refined products and more signs of demand recovery in top consumer China.
Brent crude futures gained $1.16, or 1.4%, to $83.33 a barrel by 1456 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up $1.30, or 1.7%, at $77.18. The two contracts shed about 1% in the previous session.
Brent is poised to register a 3.6% decline this week while WTI is on course for a 2.3% drop.
U.S. job growth accelerated sharply in January amid a persistently resilient labour market, but a further moderation in wage gains should give the Federal Reserve some comfort in its fight against inflation.
The U.S. central bank on Wednesday scaled back to a milder rate increase than those over the past year, but policymakers also projected that “ongoing increases” in borrowing costs would be needed.
Increases in interest rates in 2023 are likely to weigh on the U.S. and European economies, boosting fears of an economic slowdown that is highly likely to dent global crude oil demand, said Priyanka Sachdeva, market analyst at Phillip Nova.
Investors are eyeing developments on the Feb. 5 European Union ban on Russian refined products, with EU countries seeking a deal on Friday to set price caps for Russian oil products. The Kremlin said on Friday that the EU embargo on Russia’s refined oil products would lead to further imbalance in global energy markets.
“The exact details around what the cap will be and how they will implement it are still unclear,” Capital Economics commodities economist Bill Weatherburn said, adding that the uncertainty is keeping a lid on prices.
“There hasn’t been any data out of China to indicate the extent of the recovery in China’s crude demand.”
ANZ analysts noted a sharp jump in traffic in China’s 15 largest cities after the Lunar New Year holiday but said that Chinese traders had been “relatively absent”