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Oil Prices Weekly Loss as Geopolitical Risk Subsides

Oil Prices Weekly Loss as Geopolitical Risk Subsides

Oil prices saw a rise on Friday as the U.S. job market experienced unexpected slowing last month. This development has fueled expectations of a temporary halt in interest rate hikes, especially in the world’s largest consumer market. However, the overall trend for the week remains negative due to reduced concerns about oil supply disruptions driven by easing Middle East tensions.

Brent Crude and U.S. West Texas Intermediate Show Gains

Brent crude futures recorded an increase of 81 cents, equivalent to 0.9%, reaching $87.66 a barrel at 1243 GMT. Simultaneously, U.S. West Texas Intermediate crude futures gained $1.01, a 1.2% increase, bringing them to $83.47 a barrel.

While both benchmarks made significant gains of over $2 per barrel on Thursday, they are still on track for a potential weekly loss of up to 3%.

U.S. Job Growth Slows, Affecting Interest Rate Expectations

Official data released on Friday revealed that U.S. job growth slowed more than anticipated in October. Additionally, wage inflation cooled, signaling a decrease in labor market pressures. This data might reinforce the notion that the U.S. Federal Reserve need not further raise interest rates.

Geopolitical concerns are still under the spotlight. Analysts are closely monitoring the situation, especially along the Lebanese border, where Hezbollah attacks have been increasing.

Read More: China Wine Market Eagerly Awaits Australian Wine’s Return as Relations Improve

Impact of Chinese Manufacturing and Services

China’s manufacturing activity took an unexpected hit in October, with the official purchasing managers’ index (PMI) dropping below the 50-point threshold, signaling contraction. However, the private sector survey reported a slightly faster expansion in China’s services activity in October, although sales growth was the slowest in ten months, and employment remained stagnant due to dwindling business confidence.

Saudi Arabia is expected to confirm an extension of its voluntary 1 million barrels per day oil output cut through December, as anticipated by analysts.

Hezbollah Leader’s Speech

Hezbollah leader Sayyed Hassan Nasrallah is expected to make his first public comments following the recent conflict between Hamas and Israel. Analysts will scrutinize his speech for insights into how the group’s role in the conflict might evolve.

U.S. Economy’s Impact on Oil Prices

Disappointing U.S. job data has put oil prices on a downward trajectory, raising concerns about the slowing U.S. economy, the world’s largest crude consumer.

Both crude benchmarks are heading for substantial losses this week, primarily due to the weak economic figures. The absence of an escalation in the Israel-Hamas conflict has also diminished worries about oil supply disruptions in the region.

Dollar’s Influence on Oil Market

A significant drop in the dollar index, down by 0.7%, has benefited the crude market. A weaker dollar makes oil cheaper for international buyers, contributing to fluctuations in oil prices.

As the week concludes, the market awaits the release of the Baker Hughes oil rig count and CFTC positioning data, as is customary.

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