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Oil Down on Day after Dismal U.S. Jobs, Steady on Week By Investing.com

© Reuters.

By Barani Krishnan

Investing.com – Oil prices fell about 1% on Friday after an abysmal U.S. jobs report for August, although the bottom side for crude was limited by speculation that the Federal Reserve will hold off from tapering the stimulus it was providing the Covid-restrained economy.

London-traded crude, the global benchmark for oil, meanwhile, settled at $72.61 per barrel, down 42 cents, or 0.6%, on the day. For the week, Brent lost just 0.1%. 

New York-traded , the benchmark for U.S. oil, settled the day at $69.29 per barrel, down 70 cents, or 1%. For the week, WTI rose 0.8%.

The U.S. Labor Department reported on Friday that employers added 235,000 jobs in August, less than a third of the forecast 733,000, amid continued struggles with the coronavirus pandemic. The only consolation was the August unemployment rate improving to 5.2% from July’s 5.4%.

While the shockingly low jobs growth initially weighed heavier on oil, speculation that the Fed will now hold off on its stimulus taper led crude prices to rise from their lows.

The Fed has been buying $120 billion in bonds and other assets since the Covid outbreak in March last year to support the economy. The central bank has also been keeping interest rates at virtually zero for the past 18 months.

“This dooms the chance of a September taper announcement and may even take (the) chance of a taper hint off the table,” economist Adam Button said in a post on ForexLive. 

​​The Fed’s Federal Open Market Committee, or FOMC, meets September 21-22 to decide on rates and other policy matters.

After that meeting, the Fed will only get one other jobs report before its November FOMC meeting. “So this considerably dims the chance of a November taper announcement,” Button added.

The Fed’s aggressive stimulus program is being blamed for aggravating inflation in the United States, where everything from prices of gasoline to houses have risen multifold over the past year. The White House’s multi trillion-dollar Covid relief programs, passed through Congress, have added to price pressures over the past 18 months, prompting investors to hedge the weak dollar against future of commodities such as oil and gold. 

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