OIL DOWN ON STRONG US DATA

OIL PRICES dropped to over threeweek lows on Friday in a volatile session, after strong US jobs data raised concerns about higher interest rates and as investors sought more clarity on the imminent EU embargo on Russian refined products.

Brent crude futures retreated by $2.23, or 2.7%, to $79.94 (R1 396) a barrel, after rising to a session high of $84.20. It hit a session low of $79.72, its lowest since January 11.

US West Texas Intermediate crude (WTI) ended down $2.49, or 3.3%, at $73.39 a barrel, after trading between $78 and $73.13, its lowest since January 5.

Brent registered a 7.8% decline this week while WTI dropped 7.9%.

US job growth accelerated sharply in January amid a persistently resilient labour market, but a further moderation in wage gains should give the Federal Reserve some comfort in its fight against inflation.

“The market can’t decide whether it should be nervous about a recession or more worried about the Federal Reserve being aggressive with interest rates,” said Phil Flynn, analyst at Price Futures Group.

The US central bank on Wednesday scaled back to a milder rate hikes than those over the past year.

Increases in interest rates in 2023 were likely to weigh on the US and European economies, boosting fears of an economic slowdown that was highly likely to dent global crude oil demand, said Priyanka Sachdeva, market analyst at Phillip Nova.

EU countries agreed to set price caps on Russian refined oil products to limit Moscow’s funds for its invasion of Ukraine, the Swedish presidency of the EU said on Friday.

European Union diplomats said that the price caps were $100 a barrel on products that trade at a premium to crude, principally diesel, and $45 a barrel for products that trade at a discount, such as fuel oil and naphtha.