Crude Oil Prices Rise on Higher US Employment Data
By Adedapo Adesanya
Crude oil prices climbed more than 1 per cent on Friday after better-than-expected US employment data ended the days of drops.
Brent rose $1.19 or 1.5 per cent to $82.78 a barrel, while US West Texas Intermediate crude (WTI) was up 96 cents or 1.3 per cent at $76.68 per barrel.
Expectations of further rate hikes in the world’s largest economy, the US and in Europe have troubled the global growth outlook and driven both crude benchmarks down this week.
However, US employment data for February beat expectations, with nonfarm payrolls rising by 311,000, compared with expectations of 205,000 jobs added.
This is likely to ensure that the Fed will raise interest rates for longer, which analysts have said would weigh on oil prices.
According to a survey from Reuters, nonfarm payrolls likely increased by 205,000 jobs last month, less than half of the eye-popping 517,000 added in January.
If this happens, it would be the smallest gain since December 2020 and would be double the 100,000 jobs per month that economists say is needed to keep up with growth in the working-age population.
US Federal Reserve Chair, Mr Jerome Powell, has warned of higher and potentially faster rate hikes, saying the US central bank was wrong in initially thinking inflation was transitory, sending shivers ahead of its next monetary policy meeting planned for March 21-22.
On the supply side, major oil producers Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries (OPEC), re-established ties after days of previously undisclosed talks in China.
Both countries agreed to resume diplomatic relations and re-open embassies within two months, according to a statement issued by Iran, Saudi Arabia and China.
A return of this could lead to more acceptance of Iranian crude in the oil market, which could add to the number of oil barrels flowing through the world.
Investors are closely monitoring export cuts from Russia, which decided to trim oil output by 500,000 barrels per day in March.
Pressure also came following a stronger Dollar. A strengthening Dollar makes oil more expensive for holders of other currencies.