By Adedapo Adesanya
Brent fell below $80 per barrel as economic indicators raised fears and concerns about higher interest rates amid Europe’s plans to continue restricting Russia.
The international crude benchmark depreciated by $2.23 or 2.7 per cent to $79.94 a barrel, as the US West Texas Intermediate crude (WTI) pointed south by $2.49 or 3.3 per cent to trade at $73.39 per barrel.
Prices fell to over three-week lows in a volatile session after strong US jobs data raised concerns about higher interest rates and as investors sought more clarity on the imminent EU embargo on Russian refined products.
It was a tough week for the commodity as Brent registered a 7.8 per cent decline this week while WTI dropped 7.9 per cent.
Job growth in the US accelerated sharply in January amid a persistently resilient labour market. However, analysts note that a further moderation in wage gains should give the Federal Reserve some comfort in its fight against inflation.
The strength in hiring, which occurred despite layoffs in the technology sector as well as in sectors like housing and finance that are sensitive to interest rates, doused market expectations that the US central bank was close to pausing its monetary policy tightening cycle.
The US 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.
Market analysts noted that the increases in interest rates in 2023 are likely to weigh on the US and European economies, boosting fears of an economic slowdown that is highly likely to dent global crude oil demand.
Also, European Union countries agreed to set price caps on Russian refined oil products to limit Moscow’s funds for its invasion of Ukraine.
EU diplomats said the price caps are $100 per barrel on products that trade at a premium to crude, principally diesel, and $45 per barrel for products that trade at a discount, such as fuel oil and naphtha.
Ambassadors for the 27 EU countries agreed on the European Commission proposal, which will apply from Sunday.
The price caps, together with an EU ban on Russian oil product imports, are part of a broader agreement among the Group of Seven (G7) countries.
It follows a $60 per barrel cap on Russian crude that G7 countries imposed on December 5 as the G7, the EU and Australia seek to limit Russia’s ability to fund its war in Ukraine.
Both caps prohibit Western insurance, shipping and other companies from financing, insuring, trading, brokering or carrying cargoes of Russian crude and oil products unless they were bought at or below the set price caps.
The Russian government said the EU embargo on Russia’s refined oil products would lead to a further imbalance in global energy markets.
In US supply, energy firms this week cut the number of oil and natural gas rigs by the most since June 2020, energy services firm Baker Hughes Co said. US oil rigs fell 10 to 599 this week, their lowest since September, while gas rigs dropped by two to 158.
Modupe Gbadeyanka