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Oil prices up on strong US jobs data, but on track for small weekly decline

Oil prices

Oil prices rose just under 1 per cent on Friday after the US Labor Department issued its US jobs report showing higher employment numbers.  PDC Energy photo.

Oil prices pressured by rising OPEC exports, US production

On Friday, oil prices rose on a strong US jobs report that boosted hopes that demand for energy was growing.  However, crude prices were on track for a small weekly decline as rising OPEC exports and US production pressured prices.

According to the US Labor Department, employers hired more workers than expected in July and increased their wages.

Brent futures were up to $52.40/barrel by 11:45 a.m. EDT and US WTI rose by 43 cents to $49.46.

“Oil prices were supported by good news this morning on the U.S. jobs front,” Andrew Lipow, president of Lipow Oil Associates told Reuters.  He added that gasoline and diesel demand also remained strong.

Strong demand limited the losses due to rising output from crude producers, but Tamas Varg, PVM Oil Associates analyst, places the blame for price jitters squarely on OPEC.

“Increasing OPEC production and increasing OPEC exports are the reason the market has been trading lower,”  Varga told Reuters.

Barclays bank said: “we expect a downward (price) correction during this quarter”, but forecast Brent at an average of $54 per barrel during the fourth quarter.

Despite the OPEC supply cut pact, in which participants agreed to cut production by 1.8 million barrels per day (b/d), the cartel hit a record high for exports last month, according to data from Thomson Reuters Oil Research.

In July, OPEC exports were at 26.11 million b/d, an increase of 370,000 b/d.  Most of the increase is attributed to Nigeria, one of the OPEC member countries excluded from the pact due to years of unrest.

As well, Reuters is reporting Russian oil company Rosneft says its production grew by 11.1 per cent, year-on-year, in the second quarter.

Next week, officials from an OPEC and non-OPEC technical committee will meet in Abu Dhabi to discuss ways to boost compliance with the OPEC pact.

US production is also on the rise, hitting 9.43 million b/d, the highest since August 2015 and 12 per cent above its most recent low in June 2016.

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Posted in: Energy Financial

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