Oil on Friday posted its first weekly loss since the middle of last month as a forecast-topping US employment report was not enough to offset economic worries dogging the market.
Futures in New York on Friday closed down 1.6 percent for the week, despite eking out an increase after the government said that payrolls last month climbed by 224,000.
The ultimate fallout from the report was unclear, as investors fretted that labor market strength would decrease the odds of a US Federal Reserve rate cut.
The US dollar surged, adding to pressure on commodities sold in the currency.
German factory orders added to a spate of sluggish manufacturing data from around the globe. That overshadowed this week’s decision by OPEC and its allies to extend supply curbs and the seizure of a tanker carrying Iranian crude by British special forces on Thursday.
“From a demand standpoint, the question is: Will the Fed save the day [or] are we too far gone?” Sevens Report Research coeditor Tyler Richey said in Florida. “What economic data begins to show in the next few weeks and months is going to be the most important thing to watch.”
Oil on Tuesday slumped in its worst decline following a meeting by OPEC in four years.
While the cartel is struggling to boost prices, its voluntary production limits are also leaving the door open for US shale producers to grab more market share, Goldman Sachs Group Inc said.
US crude output resumed gains last week.
West Texas Intermediate oil for delivery next month gained US$0.17, or 0.3 percent, closing at US$57.51 per barrel on the New York Mercantile Exchange. There was no settlement on Thursday due to the US’ Independence Day holiday, so all transactions were booked on Friday.
Brent for September rose 1.5 percent to US$64.23 per barrel on the ICE Futures Europe Exchange. It was down 3.5 percent for the week.
Prices have also lost support from a tight physical crude market, which has pushed up global refining margins in the past few days after a lackluster May and last month.
“If the state of the economy does not improve, demand alone is not likely to be able to slice potentially growing inventories,” Global Risk Management Ltd A/S analyst Michael Poulsen wrote in a report. “The Middle East tensions are also potentially bullish for oil prices and any new development in the area could spur fears of oil disruptions.”
Meanwhile, hedge funds have grown more pessimistic about oil prices as sentiment on the global economy sours.
Money managers pushed bets on a decline in Brent crude prices to the highest since mid-January in the week ended on Tuesday, data released on Friday showed.
Short-selling bets on Brent climbed by 1.5 percent, ICE Futures Europe Exchange data showed.
The net-long position — the difference between wagers on a price increase and those on a decline — fell 2.7 percent to 248,006 options and futures contracts, the least bullish since February.
Data on West Texas Intermediate crude positions will not be released until tomorrow, due to the US holiday.
In other energy trading, wholesale gasoline rose US$0.01 to US$1.93 per gallon and heating oil climbed US$0.01 to US$1.91 per gallon, while natural gas added US$0.13 to US$2.42 per 1,000 cubic feet.
Gold fell US$21.00 to US$1396.70 per ounce and silver fell US$0.33 to US$14.92 per ounce, while copper fell US$0.02 to US$2.66 per pound.
Additional reporting by AP
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