(New York) Oil prices fell on Friday on fears of a weakening of American demand after weaker than expected employment figures.
The price of a barrel of Brent from the North Sea for delivery in July fell 0.84% to $82.96.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in June, slipped 1.06% to $78.11.
Last month, 175,000 jobs were created in the United States, compared to 315,000 in March and 240,000 expected by analysts.
The unemployment rate increased slightly, to 3.9% from 3.8%.
“A weaker employment report could mean slower economic growth and therefore lower energy demand,” said Andy Lipow of Lipow Oil Associates to explain the drop in prices.
This downward reaction already occurred on Wednesday when the market saw a sharp increase in weekly US crude inventories combined with lackluster gasoline demand, for the fourth week in a row.
Another factor in the easing of prices, “the easing of tensions in the Middle East has also alleviated fears regarding supply,” comments Ricardo Evangelista, analyst at ActivTrades.
The two crude benchmarks are at their lowest levels since mid-March, “the hopes of a ceasefire agreement between Israel and Hamas and the increase in crude oil stocks in the United States having weighed” on prices, notes John Plassard, analyst at Mirabaud.
The price drop, however, has fueled speculation that the U.S. government may be replenishing the U.S. Strategic Petroleum Reserves (SPR) with a view to buying back oil at $79 a barrel or less.
Between September 2021 and July 2023, the United States drained some 274 million barrels from its strategic reserves, or around 44% of the total. At the end of this phase, SPRs fell to their lowest level in 40 years.
On the horizon of a month, the meeting of OPEC+ members is also looming who could well, according to Andy Lipow, “renew their production cuts at least for another quarter” to support prices.
Same echo from Han Tan, analyst for Exinity, who believes that “further drops in oil prices would only strengthen the arguments in favor of continued production cuts by OPEC” (the Organization of the Exporting Countries of oil and their allies, Editor’s note), in the hope of supporting oil prices.
OPEC+ members meet on 1er June in Vienna, headquarters of the alliance, to decide on their production levels.