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Brent, WTI down more than 3% this week
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U.S. rate hike worries dominate market mood
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U.S. nonfarm payrolls rise more than expected
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Saudi Arabia, Iran re-establish ties
(Adds CFTC data)
By Arathy Somasekhar
HOUSTON, March 10 (Reuters) - Oil prices climbed more
than 1% on Friday after better-than-expected U.S. employment
data, though both benchmarks fell more than 3% on the week on
U.S. interest rate hike jitters.
Brent rose $1.19, or 1.5%, to $82.78 a barrel. U.S.
West Texas Intermediate crude (WTI) was up 96 cents, or
1.3%, at $76.68.
Expectations of further rate hikes in the world's largest
economy and in Europe have clouded the global growth outlook and
driven both crude benchmarks down this week.
However, the U.S. Federal Reserve may have less reason to
raise interest rates as aggressively as some had feared, after a
government report on Friday rekindled hopes of easing inflation
amid signs the pandemic-disrupted labor market is normalizing.
Fed Chair Jerome Powell has warned of higher and potentially
faster rate hikes, saying the central bank was wrong in
initially thinking inflation was "transitory". Its next monetary
policy meeting is planned for March 21-22.
"Oil prices are fluctuating wildly on renewed fears of Fed
interest rate increases," said Price Group analyst Phil Flynn.
A strengthening dollar is also making oil more
expensive for holders of other currencies.
Global shares, which often move in tandem with oil prices,
hit a two-month low as investors dumped banks.
Broader U.S. employment data for February beat expectations with nonfarm payrolls rising by 311,000, compared with expectations of 205,000 jobs added, according to a Reuters survey. This is likely to ensure that the Fed will raise interest rates for longer, which analysts have said would weigh on oil prices. On the supply side, major oil producers Saudi Arabia and Iran, both members of the Organization of the Petroleum Exporting Countries, re-established ties after days of previously undisclosed talks in Beijing. U.S. oil rigs fell by 2 to 590 this week, their lowest since June, according to data from Baker Hughes.
The United States was reported to have privately urged some commodity traders to shed concerns about shipping price-capped Russian oil in a bid to shore up supply. Investors are closely monitoring export cuts from Russia, which decided to trim oil output by 500,000 barrels per day in March. On Thursday, U.S. President Joe Biden proposed a budget that would scrap billions of dollars in oil and gas industry subsidies. Money managers cut their net long U.S. crude futures and options positions in the week to Feb. 21, the U.S. Commodity Futures Trading Commission (CFTC) said. (Additional reporting by Shadia Nasralla, Sudarshan Varadhan and Muyu Xu in Singapore; Editing by Louise Heavens, Emelia Sithole-Matarise and David Gregorio)
Reuters Messaging: shadia.nasralla.reuters.com@reuters.net))