(Bloomberg) — Oil registered its biggest weekly decline since July as a streak of disappointing economic data compounded fears about a global recession.
The 0.7% rise in New York-traded futures on Friday wasn’t enough to correct a 5.5% drop for the week. Rising U.S. payrolls and the lowest unemployment rate in five decades undercut prospects of interest-rate cuts by the Federal Reserve.
“The relative strength of the jobs report throws cold water on concept that the Fed will cut rates,” said Bob Yawger, director of the futures division at Mizuho Securities USA.
Oil has been under pressure all week from a series of gloomy U.S. economic data. A key measure of American service-industry activity dropped to the lowest in three years, while an employment gauge registered its weakest reading in more than five years.
West Texas Intermediate for November delivery rose 36 cents to settle at $52.81 a barrel on the New York Mercantile Exchange.
for December delivery increased 66 cents to settle at $58.37 on the ICE (NYSE:) Futures Europe Exchange. It traded at a $5.63 premium to WTI for the same month.
Signs of economic deterioration in the U.S., China and Germany are worsening an already fragile consumption outlook for fuels. OPEC member Nigeria warned Thursday that oil demand will be “very challenging” next year. Those concerns, combined with quick repairs at damaged Saudi Arabian oil installations, have evaporated oil’s gains following the Sept. 14 bombardment of the kingdom.
“Oil markets are focusing on severe macro risks, but are also shrugging off the most heightened geopolitical risk in years,” Ed Morse, an analyst at Citigroup Inc (NYSE:)., wrote 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.”
Washington and Beijing are set to restart high-level trade negotiations next week, but the chances of a short-term breakthrough don’t appear to be high. Meanwhile, the U.S. imposed tariffs on European goods including aircraft and dairy products this week.
Drilling rigs targeting crude in U.S. fields fell by three to 710 last week, the lowest since May 2017, Baker Hughes reported Friday.
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