Oil prices rise but post biggest weekly decline since March

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices edged higher on Friday but stuck to their biggest weekly losses since March after another partial lifting of Russia’s ban on fuel exports compounded demand fears from macroeconomic headwinds.

Brent futures settled up 51 cents at $84.58 a barrel on Friday. U.S. West Texas Intermediate crude futures were up 48 cents at $82.79.

For the week, Brent is down about 11% and WTI is down more than 8% on fears that persistently high interest rates will slow global growth and hurt fuel demand, even as supplies are depressed by Saudi Arabia and Russia, which have said they will continue to cut supply until the end of the year.

U.S. job growth rose by 336,000 in September, according to Labor Department statistics, far exceeding economists’ forecasts of a 170,000 increase.

Statistical sentiment is mixed for oil prices. A robust U.S. economy could support oil demand sentiment in the near term, analysts said, but instead the data led to a stronger U.S. dollar and increased bets on another interest rate hike in 2023.

A strong US dollar is usually negative for oil demand, making the commodity relatively more expensive for holders of other currencies.

“Today’s (jobs) number keeps alive the prospect of another rate hike and certainly supports the Federal Reserve’s case for the need for interest rates to stay higher for longer,” ING analysts said in a note.

Russia has announced that it has lifted its ban on diesel exports for goods delivered to ports via pipeline. Companies still have to sell at least 50% of their diesel production domestically.

The price difference between gasoline and Brent futures fell to a July low of $23.59 a barrel on the news, but has since recovered to $25.84.

“Fears for the health of the global economy and therefore oil demand going forward are at the heart of the sell-off,” SEB analyst Bjarne Schieldrop said.

But reports of firmer travel activity from China have provided a floor for prices for now. The country’s travel during the Mid-Autumn Festival and National Day holidays rose 71.3 percent year-on-year and 4.1 percent from 2019 to 826 million trips, according to Xinhua News Agency.

In an indication of future US supply, US oil rigs fell by five to 497 this week, the lowest number since February 2022, energy services firm Baker Hughes said on Friday.

Money managers trimmed their net long positions in US crude and options in the week to October 3 by 5,877 contracts to 279,759, the US Commodity Futures Trading Commission (CFTC) said on Friday.

(Reporting by Stephanie Kelly in New York, Robert Harvey in London and Sudarshan Varadhan in Singapore; Editing by William Maclean, Sharon Singleton, Louise Heavens, David Gregorio and Rod Nickel)