Oil Price Fundamental Daily Forecast – Weak Jobs Report Raises Questions about Short-Term Demand

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday, but inside yesterday’s range suggesting investor indecision and impending volatility. Helping to support the market is a weaker U.S. Dollar, which may be driving up foreign demand for the dollar-denominated asset.

At 16:52 GMT, October WTI crude oil futures are trading $69.53, down $0.46 or -0.66% and November Brent crude oil is at $72.72, down $0.31 or -0.42%.

Mixed Non-Farm Payrolls Report

The U.S. Dollar is being pressured by a mixed U.S. jobs report that either indicated a spotty economic recovery or an aberration.

The economy added only 235,000 positions, the Labor Department reported Friday. Economists surveyed by Dow Jones had been looking for 720,000 new hires.

The unemployment rate dropped to 5.2% from 5.4%, in line with expectations.

Growth in average hourly earnings continues to come in strong with a 0.6% rise month over month, the employment report showed.

Fuel Shortage Hampers Efforts to Return Crews to Offshore Oil Platforms

Hurricane Ida’s extensive damage to Louisiana heliports and fuel depots is hampering the return of offshore production crews to U.S. Gulf of Mexico platforms, according to two people familiar with the matter.

Helicopter companies that service offshore energy producers have been struggling to get access to fuel in Louisiana, after many tank farms became unreachable because of damages to roads and power. That has cut the number of flights they are handling in a day, the people said on Thursday.

“We are trying to move the fuel first to Louisiana, then the staff,” said an executive of an offshore oil producer. “On top of everything, staff is dealing with their personal issues, including losing houses and the lack of transportation to reach the base camps,” the person said.

Short-Term Outlook

We’re expecting to see a rangebound but volatile market over the short-run. About 1.7 million barrels per day of oil production shut down in the U.S. Gulf of Mexico we could see a continued drop in U.S. stockpiles.

However, if the disappointing jobs report means that COVID-19 lockdowns and restrictions are hurting demand then any gains could be capped.