Investing.com– Oil prices fell in Asian trade on Thursday, extending a run of recent losses as weak U.S. labor data fueled concerns over an economic slowdown in the country and largely offset optimism over interest rate cuts.
Uncertainty over an Israel-Hamas ceasefire lent little support to crude, although negotiations once again appeared to be falling through with no deal in sight.
Government data showing an unexpected draw in U.S. inventories also did little to stem crude’s decline.
Brent oil futures fell 0.1% to $75.95 a barrel, while West Texas Intermediate crude futures fell 0.2% to $71.16 a barrel by 21:04 ET (01:04 GMT).
Weak US labor data triggers deeper losses in oil
Oil’s latest round of losses came following a report from the U.S. labor department showing the economy added much fewer jobs than initially estimated.
The Bureau of Labor Statistics revised down March 2024’s employment gains by 818,000 positions, as part of an annual review of payrolls data.
The reading sparked renewed concerns over a U.S. recession, especially after weaker-than-expected labor data for July triggered a broad risk-off sentiment across global financial markets.
While the softer labor market reading did cement expectations for an interest rate cut in September, it also added to concerns that the Federal Reserve may be too late in cutting rates, and that the U.S. economy was headed for a hard landing.
Such a scenario bodes poorly for demand in the world’s biggest fuel consumer, especially as recent data showed oil production in the country hit a record high of over 13 million barrels per day.
US inventories shrink more than expected
But at least in the near-term, U.S. demand appeared strong, with official data on Wednesday showing oil inventories shrank by 4.6 mb in the week to August 16, much more than expectations for a 2 mb draw.
Outsized draws in both distillates and gasoline stockpiles suggested that fuel demand remained robust even as the travel-heavy summer season wound down.
But traders are uncertain over the outlook for demand later this year, especially amid growing fears of a recession. Potential production increases outside the U.S. also brewed concerns over an oil supply glut.
Weak economic readings from China also fueled concerns over slowing demand in the face of a slowdown in the world’s biggest oil importer.
