By Barani Krishnan
Investing.com – Oil put in a second week of gains as crude prices reentered range-bound trading on Friday on concerns about slowing U.S. jobs growth and the Covid situation in No. 3 energy consuming nation India.
New York-traded , the benchmark for U.S. crude, settled up 19 cents, or 0.3%, at $ 64.90 per barrel. WTI hit an eight-week high of $ 66.75 on Wednesday, before snapping a four-day rally. For the week, it showed a 2% gain.
London-traded , the global benchmark for crude, also settled up 19 cents, or 0.3%, at $ 68.28. Brent hit an eight-week high of $ 69.94 on Wednesday, before losing its momentum. For the week, it was up 1.5%.
“Oil prices might have a positive second consecutive week, but it is nothing to get energy traders excited that oil will break away from its tightening trading range,” said Ed Moya, head of America’s research at online trading platform OANDA.
Pessimism grew again on the outlook for oil after the Labor Department reported on Friday that the U.S. unemployment rate rose to 6.1 percent in April as the country added a sharply lower-than-forecast 266,000 jobs in a pandemic-suppressed market.
Economists had expected as many as 1 million new U.S. jobs for last month, building on to the March gains of 916,000. That made what the Labor Department reported disappointing to many.
“There’s a bit of disbelief around this number,” economist Adam Button said in a post on ForexLive. “I wonder if this is a game-changer and shifts the conversation towards the Fed’s baseline about rates staying very low for a very long time along with only-transitory inflation.”
Expectations of runaway U.S. inflation in an economy sprinting from Covid-19 had fueled a rally across commodities since the start of the year, despite Fed attempts to assuage concerns that rising price pressures were only temporary.
The April jobs report not only brought those lofty expectations down but also delivered a sound reminder to the oil market that the employment crisis in the world’s largest economy was far from fixed. For the record, some 21 million U.S. jobs were lost between March and April 2020, at the height of business lockdowns forced by the coronavirus, and more than 8 million of those have not returned.
“Oil’s short-term outlook remains very mixed,” OANDA’S Moya said. “India’s COVID situation could be approaching a peak, with one model eyeing 20,000 cases per day by the end of June.”
India reported another record rise in coronavirus cases on Friday, logging more than 21.4 million confirmed infections and at least 234,083 deaths since the start of the break — with both case counts and deaths crossing the halfway mark in the United States, the top infected country.
India’s Covid crisis could slash an extra 575,000 barrels per day of oil liquids demand in April and 915,000 bpd in May 2021, disturbing the almost-balanced global oil market and building a sizable glut, Rystad Energy warned earlier this week.
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