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Oil up as US jobs data hits dollar; still headed for weekly loss
[NEW YORK] Oil prices rose more than 2 per cent on Friday as a report showing weaker US jobs growth in August suppressed the dollar, pushing up commodities, but crude futures remained on track for a big weekly loss on glut concerns.
US employment growth eased more than expected last month after two straight months of robust gains and wage gains moderated, casting doubts the Federal Reserve Open Market Committee will raise interest rates at its Sept 20-21 meeting.
The dollar index weakened after the jobs report, making oil and other greenback-denominated commodities more affordable for holders of the euro and other currencies.
Oil traders and investors will be on the lookout later in the afternoon for the weekly rig count report from energy services provider Baker Hughes. The oil rig count was unchanged last week after eight weeks of consecutive rises, but traders and analysts expect it to continue rising with the recovery in crude prices.
Brent crude futures were up US$1.25, or 2.8 per cent, at US$46.73 a barrel by 10:26 am EDT (1426 GMT). It was down 6 per cent on the week, on track for its biggest weekly loss since late July.
US West Texas Intermediate futures gained US$1.16 cents, or 2.7 per cent, at US$44.32. WTI was on course to an 7-per cent drop on the week, its most since February.
"With the FOMC likely to stay in September and the dollar dictating where we could go, it's quite likely oil will hold at mid-US$40 levels," said Carl Larry Director, director of business development for oil & gas at Frost & Sullivan.
"But more telling of how oil performs will be the rig count in coming weeks and Opec gestures to support prices." Oil rose earlier in the session on comments by Russia favorable to Opec's hopes of implementing an output freeze with other oil producers.
The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-Opec producers led by Russia at informal talks in Algeria between Sept. 26 and 28 to discuss a freeze output.
Russian President Vladimir Putin said in a Bloomberg interview such an output would be right to support prices.
If Opec fails to strike a deal in Algeria, it is expected to try more action to prop the market its policy meeting in Vienna on Nov 30.
Many analysts remain skeptical that it will be successful. "The oil price will remain volatile over the coming weeks," said Hans van Cleef, senior oil economist at ABN Amro.