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Investing.com — Oil prices fell Friday after the U.S. economy added far more jobs than expected in January, bolstering the case for the Federal Reserve to delay cutting interest rates, potentially stunting economic activity.
By 09:10 ET (14.10 GMT), the futures traded 0.9% lower at $73.14 a barrel and the contract dropped 0.8% to $78.11 a barrel.
Strong payrolls hits crude market
in the world’s largest economy rose by 353,000 last month, increasing from an upwardly revised total of 333,000 in December, and significantly above the expected 187,000.
These strong numbers followed the downplaying expectations for early interest rate cuts in 2024, during a meeting earlier this week.
Keeping interest rates at elevated levels could further cool economic activity, hitting crude demand in the world’s largest consumer.
It also boosted the greenback, with the rising 0.7%, which makes commodities denominated in dollars, like oil, more expensive for foreign buyers.
Talk of Israel/Hamas ceasefire
The crude benchmarks are on track to fall over 6% this week, after multiple media reports said Israeli and Hamas leaders were considering a ceasefire.
A potential ceasefire is expected to mark a severe de-escalation in military tensions in the Middle East, which have been a key point of support for oil prices in recent months.
Attacks by the Iran-aligned, Yemeni Houthi group on vessels in the Red Sea had disrupted shipping activity in the region. After U.S.-led forces recently struck back against the Houthis, the conflict saw several shipping operators steer clear of the Suez Canal, which in turn pointed to potential oil delivery delays in Europe and Asia.
But given that the Houthis’ main point of contention was the Israel-Hamas war, any de-escalation in the conflict is expected to wind down tensions in the Red Sea, lifting any disruptions to oil supplies.
No change at OPEC+ meeting
The market had received some support on Thursday after the Organization of Petroleum Exporting Countries and allies, known as OPEC+, kept its production cuts unchanged at its latest meeting.
“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.”
(Ambar Warrick contributed to this article.)
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