Although both benchmarks remained on track to decline by more than 3% for the week due to concerns over a potential U.S. interest rate hike, oil prices rose on Friday following better-than-expected U.S. job data.
By 1:05 p.m. ET, Brent increased $1.26, or 1.5%, to $82.85 per barrel (18:05 GMT). At $76.86, West Texas Intermediate (WTI) crude for the United States was up $1.13, or 1.5%.
The outlook for global growth has been clouded by expectations of additional rate increases in the world’s largest economy and in Europe, which has pushed both crude benchmarks lower so far this week.
However, a government report on Friday rekindled hopes of easing inflation amid signs that the pandemic-disrupted labor market is normalizing, suggesting that the U.S. Federal Reserve may not have as much justification for raising interest rates as sharply or as high as previously believed.
The central bank made a mistake when it initially believed inflation was “transitory,” according to Fed Chair Jerome Powell, who has warned of higher and potentially faster rate increases. March 21–22 will mark its following monetary policy meeting.
Oil prices are rapidly swinging, according to Price Group analyst Phil Flynn, because to resurgent concerns about Fed interest rate increases.
Oil is becoming more expensive for owners of foreign currencies due to a strengthening dollar.
When investors sold banks, the value of global shares, which frequently fluctuate along with oil prices, fell to a two-month low.
According to a Reuters survey, nonfarm payroll growth in February was more than anticipated, increasing by 311,000 jobs as opposed to the 205,000 expected. As a result, the Fed is expected to continue raising interest rates, which economists have predicted will have an impact on oil prices.
On the supply side, after days of previously unreported discussions in Beijing, major oil producers Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries, restored their relations on Friday.
In an effort to increase supplies, the US is said to have secretly persuaded certain commodity merchants to abandon their qualms about transporting Russian oil with a price cap.
Investors are keeping a tight eye on Russia’s export restrictions after it chose to reduce its oil production by 500,000 barrels per day in March.
On Thursday, U.S. President Joe Biden also put forth a budget that would eliminate billions of dollars in subsidies for the oil and gas sector.