Oil prices mixed ahead of U.S. jobs report, more gains eyed

By Roslan Khasawneh and Sonali Paul

SINGAPORE (Reuters) – Oil prices were mixed on Friday after a sharp rise in the previous session due to a weaker dollar and a decline in US crude oil inventories, and were set for modest weekly gains ahead of the highly anticipated US monthly labor report.

Brent crude oil futures rose 13 cents, or 0.2%, to $ 73.16 a barrel at 6:19 GMT, while U.S. crude oil futures (WTI) rose 4 cents, or 0.1%, to $ 69.95 a barrel Barrels fell.

Both benchmark oil contracts rose 2% on Thursday, putting WTI on track to rise 1.8% for the week, while Brent headed for a 0.6% weekly gain.

The downside in WTI was likely due to traders offsetting their positions ahead of the US non-farm salaries report for August.

However, some analysts see scope for further oil price hikes amid shortages in crude oil supplies and signs of a recovery in fuel demand.

“With the oil market still in heavy loss for the remainder of the year, the oil market appears to be on the verge of further recovery as OPEC + signals discipline in easing cuts and US inventories continue to decline,” said Edward Moya, chief executive officer Market analyst at OANDA.

This week’s surge is also due to a falling US dollar making oil cheaper in other currencies and the aftermath of Hurricane Ida.

“The ongoing downtime in US Gulf production and refining capacity in Louisiana, which will drill a bigger hole in already depressed US oil supplies, and data showing continued strong recovery in domestic fuel demand, are supportive factors,” said Vandana Hari , Energy Analyst at Vanda Insights.

Around 1.7 million barrels of oil per day remain closed in the U.S. Gulf of Mexico, with damage to heliports and fuel depots slowing crews’ return to offshore platforms, sources told Reuters.

To offset the supply impact, oil demand has been subdued as prolonged blackouts slow the reopening of Louisiana refineries.

The story goes on

Demand is likely to take center stage after the Organization of Petroleum Exporting Countries and allies, collectively known as OPEC +, stuck to their plan this week to bring 400.00 barrels per day (bpd) back into the market over the next few months amid the boom COVID-19 cases, analysts said.

“The focus is shifting back to the shape of demand recovery, with some concern that it will be difficult to keep the market in deficit for the next year if OPEC + continues to increase supply at the expected rate of 400,000 bpd,” said Innes .

(Reporting by Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; editing by Gerry Doyle and Richard Pullin)

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