Brent crude futures for July fell 71 cents, or 0.85%, to $82.96 a barrel. U.S. West Texas Intermediate crude for June fell 84 cents, or 1.06%, to $78.11 a barrel.
Investors feared higher and longer borrowing costs would dampen economic growth in the United States, the world’s top oil consumer, after the Federal Reserve decided this week to keep interest rates steady.
Over the week, Brent fell more than 7%, while WTI fell 6.8%.
U.S. job growth slowed more than expected in April and annual wage growth slowed, data showed Friday, prompting traders to bet that the U.S. central bank will make its first cut in wages. this year’s interest rate in September. “The economy is slowing down a little bit,” said Tim Snyder, an economist at Matador Economics. “But (the data) gives the Fed a path forward to at least cut rates this year,” he said. The Fed held rates steady this week and reported high inflation numbers that could delay rate cuts. Higher rates generally weigh on the economy and can reduce demand for oil. The market is reassessing the expected timing of possible rate cuts after the release of weaker-than-expected monthly employment data, said Giovanni Staunovo, an analyst at UBS.
U.S. energy companies this week reduced the number of operating oil and gas rigs for the second week in a row, to the lowest since January 2022, Baker Hughes said in its closely watched report on Friday.
The oil and gas rig count, an early indicator of future production, fell by eight to 605 in the week to May 3, the largest weekly decline since September 2023. The rig count Oil stocks fell by seven to 499 this week, the biggest weekly decline. weekly decline since November 2023. [RIG/U]
Geopolitical risk premiums from the war between Israel and Hamas have faded as both sides consider a temporary ceasefire and hold negotiations with international mediators.
Further afield, the next meeting of OPEC+ oil producers – members of the Organization of the Petroleum Exporting Countries and allies including Russia – is set for June 1.
Three sources from the OPEC+ group said it could extend its voluntary oil production cuts beyond June if oil demand does not increase.
Fund managers reduced their net long positions in U.S. crude futures and options in the week to April 30, the U.S. Commodity Futures Trading Commission (CFTC) said.
