Introduction
The recent disappointing US job data has fueled concerns about reduced oil demand, causing a decline in crude prices just days before the OPEC+ meeting.
Oil Price Decline
On Friday, oil prices fell due to the underwhelming US employment figures, sparking fears of diminished demand. The Brent crude oil benchmark for October delivery, used as a reference contract on its first trading day, dropped by 2.83% to $69.67.
The US West Texas Intermediate (WTI) crude oil benchmark for September delivery also declined by 2.79% to $67.33.
Market Reactions
Stephen Schork of The Schork Group explained to AFP, “The markets are being shaken by economic headlines… disappointing US employment data.”
The US job market deteriorated in July, primarily due to uncertainty caused by trade wars initiated by President Donald Trump. The unemployment rate rose to 4.2% from June’s 4.1%, with job creation standing at 73,000 and previous May and June forecasts revised downward to unseen levels since the Covid-19 pandemic.
Investor Behavior
Earlier in the week, investors engaged in massive buying driven by the risk of US sanctions on Russian oil if Moscow fails to end the war in Ukraine by August 8, according to Schork.
OPEC+ Meeting Anticipation
The market is also awaiting the OPEC+ meeting on Sunday, which may increase its production limit by 548,000 barrels per day for September.
Key Questions and Answers
- What caused the recent drop in oil prices? The decline was primarily due to disappointing US job data, raising concerns about reduced oil demand.
- Who is Stephen Schork, and what is his role? Stephen Schork is from The Schork Group, an energy market analysis firm. He provided insights on the situation to AFP.
- What are the recent US employment figures? The US job market deteriorated in July, with an unemployment rate of 4.2% and job creation at 73,000, lower than previous forecasts.
- What is the reason behind investors’ massive buying earlier in the week? Investors bought heavily due to the risk of US sanctions on Russian oil if Moscow does not end the war in Ukraine by August 8.
- What might OPEC+ decide at their upcoming meeting? OPEC+ may increase its production limit by 548,000 barrels per day for September.
