Americas News
Oil Down For The Week Despite Rate Hike-Obsessed Traders Favouring U.S. Jobs Growth
Even though oil this week has sustained consistent losses due to fears that a robust U.S. economy will cause bank interest rate hikes that in turn could trigger a recession, news of better than expected U.S. employment data on Friday caused schizophrenic traders to boost the commodity by over 1 percent.
The data for February exceeded expectations with nonfarm payrolls rising by 311,000, compared with expectations of 205,000 new jobs – which could encourage the Fed to raise interest rates for longer.
Still, Brent rose $1.19, or 1.5 percent, to settle at $82.78 per barrel; West Texas Intermediate was up 96 cents, or 1.3 percent, at $76.68.
However, thanks to the ongoing fixation about rate hikes, both benchmarks fell more than 3 percent on the week, and sentiments weren't improved by the White House's proposed budget that would scrap billions of dollars in oil and gas industry subsidies.
Daniel Ghali, a commodity strategist at TD Securities, remarked, "Risk appetite is dominating as crude traders shy away from substantially increasing their positioning with prices locked into a tight range."
In other oil related news on Friday, Trans Mountain Corporation said its expansion project is near 80 percent complete, with mechanical completion expected to occur at the end of 2023; the pipeline will be in-service in the first quarter of 2024.
Once completed, the pipeline system will have nearly tripled its capacity, an increase of 590,000 barrels per day (bpd) to a total of 890,000 bpd.
Also on Friday, Scott Sheffield, CEO of Pioneer Natural Resources, told media that while U.S. oil production will continue to return to pre-Covid levels, limits on refining capacity mean it will not grow to record peaks.
He said, "We just don't have that potential to grow U.S. production ever again……we don't have the refining capacity: if we all add more rigs, service costs will go up another 20-30 percent, it takes away free cash flow.
"And secondly, the industry just doesn't have the inventory."
Sheffield went on to note that while "we may get back to 13 million bpd" it would be at a "very slow pace."
