Houston, March 12 (BNA): Oil prices rose more than 1% on Friday after better-than-expected US employment data, although both benchmarks fell more than 3% for the week on US interest rate hike jitters.
Brent crude rose $1.19, or 1.5 percent, to $82.78 a barrel. US West Texas Intermediate crude rose 96 cents, or 1.3%, to $76.68.
Reuters reported that expectations of higher interest rates in the world’s largest economy and in Europe clouded the outlook for global growth and pushed both benchmarks lower this week.
However, the US Federal Reserve may have less reason to raise interest rates as aggressively as some had feared, after a government report on Friday revived hopes of easing inflation amid signs of a return to normal in the pandemic-disturbed labor market.
Fed Chairman Jerome Powell warned against raising interest rates further and possibly faster, saying the central bank was wrong to initially believe inflation was “temporary.” The next monetary policy meeting is scheduled for March 21-22.
“Oil prices are very volatile with renewed fears of a Fed rate hike,” said Phil Flynn, analyst at Price Group.
A stronger dollar also makes oil more expensive for holders of other currencies.
Global stocks, which often move in tandem with oil prices, hit a two-month low as investors dumped banks.
Broader US employment data for February beat expectations with non-farm payrolls rising by 311,000 jobs, compared to expectations for an addition of 205,000 jobs, according to a Reuters survey. This is likely to ensure the Fed will raise interest rates for a longer period, which analysts said would affect oil prices.
On the supply side, major oil producers Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries (OPEC), restored ties after days of previously undisclosed talks in Beijing.
US oil rigs fell by 2 to 590 this week, the lowest since June, according to data from Baker Hughes.
It was reported that the US had privately urged some commodity traders to brush off concerns about shipping capped Russian oil in an effort to shore up supplies.
Investors are closely watching export cuts from Russia, which decided to cut oil production by 500,000 barrels per day in March.
On Thursday, US President Joe Biden proposed a budget that would eliminate billions of dollars in oil and gas industry subsidies.
The US Commodity Futures Trading Commission (CFTC) said that money managers net-cut their US crude futures contracts and options in the week ending February 21.
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