By Adedapo Adesanya
The prices of oil grades fell on Friday, settling at their lowest since January after data showed the US economy added fewer jobs than expected last month, and weak Chinese economic data added more pressure.
Brent crude futures depreciated by $2.71 or 3.41 per cent to $76.81 a barrel and the US West Texas Intermediate (WTI) crude futures went down by $2.79 or 3.66 per cent to trade at $73.52.
US job growth slowed more than expected in July and unemployment increased to 4.3 per cent, pointing to raising fears of a possible recession.
The sharp slowdown in the labour market had been flagged for a while in surveys and a rise in the number of people on unemployment benefits.
The US Federal Reserve’s rate hikes in 2022 and 2023 have weighed on demand for labour, with government data this week showing hires in June were the lowest in four years.
Economic data from top oil importer China and surveys showing weaker manufacturing activity across Asia, Europe and the US raised the risk of a sluggish global economic recovery that would weigh on oil consumption.
Prices were further impacted by a decrease in manufacturing activity in China, which increased concerns regarding demand growth following the release of data in June that indicated imports and refinery activity in the world’s largest oil importer were lower than they had been a year prior.
Also, Asia’s crude imports in July fell to their lowest in two years, sapped by weak demand in China and India.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Thursday left the group’s oil output policy unchanged, including a plan to start unwinding one layer of production cuts from October.
Meanwhile, a survey by Reuters found that OPEC oil output rose in July as a rebound in Saudi Arabian supply and small increases elsewhere offset the impact of ongoing voluntary supply cuts by other members and the wider OPEC+ group.
The 12-member OPEC group pumped 26.70 million barrels per day last month, up 100,000 barrels per day from June.
Oil investors are also keeping an eye on the Middle East, where Lebanon’s Iran-backed Hezbollah has announced a new phase in its confrontation with Israel.
Nonetheless, experts reported no major interruption in regional oil supply as prices fell to multi-week lows days after the assassination of key leaders of Iran-aligned terrorist organisations Hamas and Hezbollah fuelled concerns of an all-out conflict.
Dipo Olowookere