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Oil prices just higher after jobs data; OPEC+ prompts weekly losses

Published 07-06-2024, 07:06 am
Updated 07-06-2024, 06:58 pm
© Reuters.

Investing.com-- Oil prices stabilized Friday after strong U.S. jobs data, with traders weighing up the potential for interest rates to remain elevated for longer with healthy economic activity in the world's biggest consumer.

At 09:20 ET (13:20 GMT), Brent oil futures rose 0.1% to $79.92 a barrel, while West Texas Intermediate crude futures rose 0.2% to $75.72 a barrel.

Payrolls rise by more than expected

Data released earlier Friday showed that the U.S. economy added more jobs than expected last month, with nonfarm payrolls rising by 272,000 in May, surging from April’s revised lower 165,000 release.

This was higher than the average monthly gain of 232,000 over the prior 12 months. 

This stronger than expected release came after a swathe of weak U.S. economic readings had ramped up concerns over worsening demand, but also pushed up expectations that the Federal Reserve will begin trimming rates by September.

The Fed is set to meet next week and is set to keep rates steady, for now.

Lower interest rates are expected to spur an eventual recovery in economic activity, which in turn is expected to support oil prices. 

Set for sharp weekly losses after OPEC+ meeting

That said, both contracts were set to lose well over 1% this week, after they plummeted to four-month lows.

The Organization of Petroleum Exporting Countries and allies (OPEC+) signaled at its latest meeting, over the weekend, that it could begin scaling back its production cuts later this year.

Energy ministers of Saudi Arabia, the United Arab Emirates and Russia said on Thursday that weakness in the market could see the cartel still tighten supply, Reuters reported, citing comments made at a St. Petersburg conference.

The comments come after the OPEC+ over the weekend said it will maintain 3.6 million barrels per day of cuts until end-2024. But it also outlined detailed plans for scaling back 2.2 million bpd of cuts from October 2024 to September 2025.

(Ambar Warrick contributed to this article.)

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