Oil Extends Rally on Strong US Jobs Data

By Adedapo Adesanya

Oil prices kept up their positive momentum on Thursday on the back of a better-than-expected jobs data from the United States.

The data released in the day indicated that more jobs were added to the economy despite the crisis caused by coronavirus related lockdowns.

Yesterday, the Brent crude rose by 74 cents or 1.76 percent to trade at $42.77 per barrel, while on its part, the US West Texas Intermediate (WTI) crude returned to $40 level, gaining 47 cents or 1.18 percent to settle at $40.29 per barrel.

As the United States prepare for holiday this weekend to mark its independence day, data showed that jobs rose by 4.8 million in June and the previous month was revised higher.

For crude oil, it built on gains from Wednesday following a large drop in US crude inventories as well as plunging output of nearly 10 percent from members of the Organisation of the Petroleum Exporting Countries (OPEC).

Crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, according to data from the US Energy Information Administration (EIA).

But further gains may be limited as fresh outbreaks of the virus are reported across the world’s biggest economy, prompting some states to pause or even reverse re-opening measures.

New COVID-19 cases in the United States rose by nearly 50,000 in one day, leading states to restrict movements and close bars and restaurants again, a decision which is expected to affect further job growth.

While oil has recovered from an unprecedented market crash and is trading near its highest levels since early March, the rebound in fuel consumption has not been stable.

The recent gains have been spurred by evidence that efforts to cut production are working. A survey on Wednesday showed that OPEC output fell to the least since 1991 in June, while Russia reached near-total compliance with its OPEC+ quota.

However, OPEC+ hasn’t made any decision yet on whether to extend its full production cutback, which stands at 9.7 million barrels a day, into August, or ease it as initially planned to 7.7 million at the end of this month. The coalition will meet on July 15 to decide.