Oil prices continued their downtrend market as a reaction of disappointing U.S. job market data.
That’s what Joseph Dahrieh, Managing Principal at Tickmill, said in a markets analysis sent to Rigzone today, adding that “the labour market showed fewer jobs added than expected and a rise in unemployment, heightening negative sentiment regarding the U.S. economy.”
“Worries about a potential U.S. recession outweighed concerns about supply disruptions from rising tensions in the Middle East,” Dahrieh noted.
“This marked the fourth consecutive week of losses for both Brent crude and WTI crude, the longest losing streak since November last year,” Dahrieh continued.
The Tickmill Managing Principal stated in the analysis that the bearish sentiment has been exacerbated by reduced diesel consumption in China and OPEC+’s plan to phase out production cuts starting in October.
“An increase in OPEC oil output in July, largely due to higher Saudi Arabian supply, also contributed to the downward pressure”, Dahrieh added.
“Although geopolitical tensions in the Middle East initially raised concerns about potential disruptions in oil supplies, these fears have diminished compared to the concerns on the economy, leading to prices settling at multi-week lows,” he went on to state.
In a separate market analysis sent to Rigzone on Monday, Antonio Ernesto Di Giacomo, a Senior Market Analyst at XS.com, noted that the United States economy showed signs of cooling in July, “surprising analysts and experts with much lower than expected job growth.”
“On August 2, 2024, according to the Department of Labor data, nonfarm payrolls increased by only 114.000 jobs, marking the lowest figure since January 2021. This represents a notable decrease compared to the revised 179.000 jobs in June, which is well below the initial forecast of 177.000,” he added.
“Additionally, the figures for May and June were revised downward, resulting in 29.000 fewer jobs than previously reported. While sectors such as healthcare, construction, and transportation continued to show job growth, the information sector suffered significant losses, reflecting a worrying trend in some regions of the economy,” he continued.
Di Giacomo also highlighted in the analysis that the unemployment rate increased to 4.3 percent from the 4.1 percent recorded in June.
“This rise represents a steady increase for three consecutive months, which could indicate a shift in labor market trends,” he added.
“Moreover, the average monthly wage growth was only 0.2 percent, below the 0.3 percent expected by analysts. This led to an annual increase of 3.6 percent in average hourly earnings, insufficient to combat current inflationary pressures,” he continued.
“These data suggest that the U.S. labor market is experiencing an adjustment, with slower growth that could have significant implications for the overall economy,” he said.
Di Giacomo warned in the analysis that the U.S. economy is at a crucial moment where the cooling labor market and rising unemployment generate significant concerns.
“The Federal Reserve faces the challenge of balancing inflationary risks with the need to support economic growth,” he said.
“The upcoming policy decisions will be critical in determining the direction of the U.S. economy in the coming months. With the possibility of an interest rate adjustment, the next few months will be vital in assessing how the economy will respond to these challenges and what measures will be implemented to ensure stability and sustainable growth,” he continued.
On July 31, the Brent price closed at $80.72 per barrel and the WTI price closed at $77.91 per barrel. On August 2, the former closed at $76.81 per barrel and the latter closed at $73.52 per barrel. At the time of writing, the Brent price is trading at $75.42 per barrel and the WTI price is trading at $72.00 per barrel.
Source: www.rigzone.com
- Energies Media Staffhttps://energiesmedia.com/author/oilmanwp/
- Energies Media Staffhttps://energiesmedia.com/author/oilmanwp/
- Energies Media Staffhttps://energiesmedia.com/author/oilmanwp/
- Energies Media Staffhttps://energiesmedia.com/author/oilmanwp/
- Energies Media Staffhttps://energiesmedia.com/author/oilmanwp/
- Energies Media Staffhttps://energiesmedia.com/author/oilmanwp/
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