Oil prices fell before U.S. jobs, but are expected to be their best week in 6 months.
Oil prices fell on Friday as the market waited for the much-watched U.S. non-farm employment report to provide more economic clues, but oil prices are expected to rise strongly after OPEC+ announced its biggest production cut since the pandemic in 2020.
As of 20:44 ET, Brent Oil fell 0.4% to $94.43 per barrel, while WTI remained at around $88.53 per barrel. The two contracts rose 7.4% and 11% respectively this week, marking the biggest single-week gains since the outbreak of the Russian-Ukrainian war in March.
OPEC will reduce production by 2 million barrels per day in the next few months. This move is mainly to deal with the sharp drop in oil prices this year. The cartel expressed uneasiness about the oil price remaining below $90 per barrel. Crude oil prices remain well below their annual peak, hit by rising dollar and concerns that higher interest rates and inflation will erode demand.
Given that the data is expected to be a factor in the Fed rate hike plan, Friday's non-farm employment report is expected to illustrate this aspect of the market more clearly.
Although Friday's data is expected to show a drop in new employment rates, any signs of stable labor market will give Feder more room to keep a big hike in rate hike.
Feders largely this week refuted speculation that a heightened recession would prevent the bank from slowing down its rate hikes.
Their comments supported the dollar, thus preventing oil prices from rising. The strengthening of the dollar is also one of the biggest pressures on crude oil prices this year, as it makes the commodity , which is more expensive in USD.
In addition to employment data, the crude oil market is also waiting for the US government to take measures to deal with the OPEC + production cuts. The Biden administration is largely opposed to production cuts and is expected to release more oil from its strategic oil reserves to prevent fuel prices from rising sharply before the November midterm elections.
As the dollar weakens, U.S. jobs are waiting to be announced, gold rises for the second consecutive week. But as data is released, gold prices have barely changed on Friday, but as the pressure on the dollar eases, gold prices are expected to rise for the second consecutive week.
Gold prices benefited as the dollar further pulled back from its 20-year high this week, while U.S. Treasury yields also fell as markets bet that weak economic growth will push the Fed to eventually soften its hawkish stance.
But a series of hawkish signals from Fed officials prevented the dollar from falling this week. Fed Chairman Jerome Powell warned that the bank would face the risk of economic turmoil in a process of sharp rate hikes to calm inflation.
is now focusing on U.S. non-farm employment data released later on Friday. While data reflecting labor market health is expected to decline from the previous month, any strong signs could provide the Fed with more room to keep interest rates hikes.
Spot gold is basically flat at $1,712.03 per ounce, and gold futures are also stable at around $1,720.25 per ounce. Both tools will rise by about 3% this week.
This year, the price of gold suffered a heavy blow due to rising interest rates, which increased the investment cost of gold. In September, gold prices fell to their lowest point in more than two years, and the current gold price rebounded to its lowest point by more than $100.
But gold may profit from the rest of the year, especially as the situation in major economies continues to deteriorate. Yellow metals will also grow during the holiday season this month.
In terms of industrial metals, copper prices fell 0.3% last Friday to $3.4272 a pound, and are expected to rise slightly this week.
As the world's largest producer Chile , it has also lowered its price estimates recently as economic activity is slowing around the world.
However, due to the new sanctions from Russian companies, which may lead to inventory shortages, the market will also face potential supply pressure.
