By Adedapo Adesanya
Oil prices fell on Friday after a weaker than expected jobs report in the United States indicated that economic recovery was slowing and will affect fuel demand during a resurgent pandemic.
The report from the US Labour Department showed that in August, nonfarm payrolls increased by just 235,000 across the month, well short of the 720,000 new hires projected by economists.
The disappointing US job data came amid a softening in demand for services and persistent worker shortages as COVID-19 infections soared.
This information dampened the mood of the market and weakened the Brent crude by 42 cents or 0.58 per cent to $72.61 a barrel and then soften the US West Texas Intermediate (WTI) crude by 70 cents or one per cent to $69.29 a barrel.
Meanwhile, oil and gas production in the US Gulf of Mexico remained largely halted in the aftermath of Hurricane Ida, with 1.7 million barrels or 93 per cent of daily crude output suspended, according to offshore regulator the Bureau of Safety and Environmental Enforcement.
The hurricane, which landed last Sunday, shut in some 13 per cent of US refining capacity that could take weeks to restore. Louisiana is working to restore power to residential and commercial areas as an estimated 950,000 customers are without power.
Market analysts see room for further price gains after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) stuck to a plan to add 400,000 barrels per day to the market over the next few months.
The United States welcomed the move and pledged to press the exporters to do more to support economic recovery by unleashing production.
There were also positives from Europe as business activity remained robust in August despite the impact of the Delta variant of COVID-19 and broad supply chain problems.
The final IHS Markit composite PMI (purchasing managers’ index) reading for the bloc dropped to 59.0 from July’s 15-year high of 60.2, remaining well clear of the 50 mark that separates expansion from contraction.
