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Oil falls as US jobs data dents hope for near-term rate cuts
Published by Jessica Weisman-Pitts
Posted on February 2, 2024
3 min readLast updated: January 31, 2026
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on February 2, 2024
3 min readLast updated: January 31, 2026
NEW YORK (Reuters) -Oil prices fell by about 2% on Friday and were headed for weekly losses after U.S. jobs data shrank the odds of imminent interest rate cuts in the world’s largest economy, which could dampen crude demand.
Faltering growth in China and the possibility of some easing of tensions in the Middle East also reduced prices.
Brent crude futures were down $1.53, or 1.9%, at $77.17 a barrel by 11:12 a.m. EDT (1612 GMT) and U.S. West Texas Intermediate crude futures fell $1.72, or about 2.3%, to $72.10.
Both benchmarks were on track for a loss of about 8% on the week.
High interest rates, which tend to dampen economic growth and oil demand, in major economies like the United States and the euro zone appear to be here to stay in the near term.
Data on Friday showed U.S. employers added far more jobs in January than expected, reducing the chances of near-term Federal Reserve rate cuts. The dollar jumped against all major currencies as a result.
“Prices were chugging along little changed prior to the report, but a huge beat on jobs created is kicking the can down the road for interest rate cuts,” said Matt Smith, director of Commodity research at ClipperData.
Across the Atlantic, a European Central Bank policymaker on Friday also suggested it was too early to cut interest rates in the euro zone.
Meanwhile, concern over China’s economic recovery persisted, with the International Monetary Fund forecasting that the country’s economic growth would slow to 4.6% in 2024 and decline further in the medium to about 3.5% in 2028.
A weekly loss in oil prices was already in motion after unsubstantiated reports of a ceasefire between Israel and Hamas caused prices to settle more than 2% down on Thursday.
Mediators are awaiting a response from Hamas to a proposal drafted last week with Israeli and U.S. spy chiefs and passed on by Egypt and Qatar for the war’s first extended ceasefire.
A pause could ease political risk looming over Gulf and Red Sea shipping lanes, which are key for global energy flows.
On Thursday, sources said that the Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, had kept its output policy unchanged. The group will decide in March whether to extend the voluntary oil production cuts that are in place for the first quarter, the sources said.
OPEC+ has output cuts of 2.2 million barrels per day (bpd) in place for the first quarter, as announced in November.
“What has been already been made clear last year is that the reversal of those cuts will be gradual,” said UBS analyst Giovanni Staunovo, adding that the bank expects an extension into the second quarter.
(Reporting by Laila Kearney, Noah Browning, Natalie Grover, Emily Chow and Jeslyn LerhEditing by David Goodman, David Evans and Susan Fenton)
Crude oil is a natural, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. It is a key source of energy and is refined into various products like gasoline and diesel.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal. They are influenced by central banks and affect economic activity.
The Federal Reserve, often referred to as the Fed, is the central bank of the United States. It regulates the U.S. monetary and financial system, including setting interest rates.
Brent crude is a major trading classification of crude oil originating from the North Sea. It serves as a benchmark for oil prices globally.
Economic growth refers to the increase in the production of goods and services in an economy over a period of time, typically measured by GDP.
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