Crude Briefly Drops Below $58
It was a rough week for U.S. crude, which fell 6.2% last week, its biggest one-week decline since July. The downturn has continued on Monday, with crude touching a low of $57.98, its lowest level since December 6th.
Investor risk appetite has made a fast recovery after the recent showdown between the U.S. and Iran raised fears of war in the Middle East and sent crude above $65 per barrel. However, Iran and the United States both stepped down and tensions have significantly eased. With no immediate danger to crude production or supply routes, oil prices have taken a tumble since last week.
U.S Nonfarm Payrolls Slide
The U.S. labor market has been a driving force in the success of the U.S. economy, but December employment numbers, released on Friday, were a major disappointment. Nonfarm payrolls dropped sharply to 145 thousand, compared to 266 thousand a month earlier. This missed the estimate of 162 thousand. Wage growth fell by 0.1% to 2.9%, its lowest level since July 2018. The unemployment rate remained unchanged at 3.5 percent.
Despite all the talk about a ‘tight’ labor market, weaker real wages will likely translate into reduced consumer spending, which could spell trouble for economic growth in 2020 and weigh on oil prices.