US oil futures wobbled between gains and losses Friday morning on the back of a better than expected monthly domestic job growth report for February. The jobs data as expected drove the US dollar higher undercutting oil prices.
The oil price benchmark was moderately higher before the announcement of the jobs data on the continued uncertainty of the condition of the Libyan oilfields and the recent Brent futures price hike by Saudi Arabia.
The Price however came tumbling after the US commerce department announced that nonfarm payroll jobs in the US grew by 295 000 in February against the 249 000 average estimate of analysts polled by the Wall Street Journal.
Though a strong jobs report would be expected to bolster the price of oil as it would indicate greater demand, it undercut oil by driving the dollar up with people betting on a sooner than expected interest hike by the Fed Reserve.
“The strong jobs numbers are a bit of a double-edged sword for oil, as they denote a better economy while raising the specter of the first U.S. rate hike in years,” Phil Flynn, analyst at the Price Futures Group in Chicago told Reuters.
“That said, the bottom side in oil is still being protected by the situation in Libya and Iraq, and upcoming oil rig data,” Flynn added.
The benchmark Brent oil had earlier Friday hit above $61 and crude reached an impressive $51 a barrel as fighting intensified in Iraq with several oilfields being set ablaze.
After the jobs data report, however, Brent tumbled more than 50 cents to stand at $60.04 while the price of crude oil had fallen to about $50.06 by 11.00 AM EST.
While the situation in North African countries and the Middle East continues to support oil prices, trades are still wary of a looming agreement between the West and Iran on a nuclear deal. Experts warn that if sanctions are lifted, Tehran will export more crude oil to the US.
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