By Barani Krishnan
Crude prices steadied on Friday but remained on track to their largest weekly loss since July after a “decent” U.S. jobs report helped staunch the market’s bleeding over the past eight sessions without covering the gaping hole left by oil bears.
U.S. West Texas Intermediate crude was up 14 cents, or 0.3%, at $52.59 per barrel by 1:45 PM ET (13:45 GMT) after the Labor Department reported a Nonfarm Payrolls growth of 136,000 in September. At the same time, the U.S. unemployment rate fell to a 50-year low.
U.K. Brent oil was up 53 cents, or 0.9%, at $58.24.
For the week though, WTI was down nearly 6%, its most since mid-July.
Brent was down almost 6% on the week.
In just two weeks, oil’s fortunes have been dramatically turned on its head. A market that seemed poised for WTI in the high $60s and $70 for Brent in the aftermath of the Sept. 14 attack on Saudi Arabian oil facilities is now back to the pre-attack lows.
Analysts attributed the shifting sentiment to renewed worries about a global recession and prospects for a continued drag in the U.S.-China trade war, although White House’s economic adviser Larry Kudlow said on Friday that the two countries would resume negotiations next week.
“A core group of speculative traders is always long oil, holding positions on higher prices, since banks and hedge funds need to hedge. Their current positioning suggests they have been paralyzed and neutral since June,” New York-based Energy Intelligence said in a note.
Some, however, think that a premium on supply risks is still warranted.
“Oil markets are focusing on severe macro risks, but are also shrugging off the most heightened geopolitical risk in years,” newswires cited Citigroup (NYSE:C) analysts including Ed Morse as saying in a report. “As markets shed just about any consideration of supply risk, attention stays focused on what is nearly universally expected to be a significantly weaker year of demand growth.”
Earlier Friday, Nigeria’s Minister of State for Petroleum Resources Timipre Sylva told Bloomberg TV that the so-called OPEC+ group would look at making additional output cuts to keep the market in balance if necessary.
“Everybody agrees in OPEC that we need to stabilize the market. We cannot allow prices just to plummet,” Sylva said.
