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Oil slips as COVID variant weighs on U.S. jobs

By Reuters

By Jessica Resnick-Ault

NEWYORK -Oil prices fell on Friday, slipping after a U.S. jobs report indicated a patchy recovery amid the pandemic.

Losses were capped by concerns that U.S. supply would continue to be limited in the wake of Hurricane Ida, which cut production from the U.S. Gulf of Mexico.

Brent crude futures were down 34 cents to $72.69 a barrel at 1:15 p.m. ET (1715 GMT), while U.S. West Texas Intermediate (WTI) crude futures were down 54 cents at $69.45 a barrel. Both benchmark oil contracts were largely steady for the week.

“Prices slipped on the employment report, which was clearly impacted by the Delta variant,” said John Kilduff, a partner at Again Capital in New York. “This was a reality check that the coronavirus is still impacting demand,” he added.

Non-farm payrolls missed expectations with an increase of 235,000 jobs amid a softening in demand for services and persistent worker shortages as COVID-19 infections soared. Economists polled by Reuters had forecast non-farm payrolls would increase by 728,000 jobs.

Meanwhile about 1.7 million barrels per day of oil production remain shut in the U.S. Gulf of Mexico, with damage to heliports and fuel depots slowing the return of crews to offshore platforms, sources told Reuters.

“The prolonged U.S. Gulf production and Louisiana refining capacity outages, which are bound to carve a bigger hole in the already diminished U.S. oil stockpiles, as well as data showing continued strong domestic fuel demand recovery are supportive factors,” said Vandana Hari, energy analyst at Vanda Insights.

Some analysts see room for further price gains amid tightening crude supplies and signs of recovering demand after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, stuck to a plan to add 400,000 barrels per day (bpd) to the market over the next few months.

The United States welcomed the move and pledged to press the exporter club to do more to support economic recovery by unleashing production.

“With an oil market still strongly in deficit for the remainder of the year, oil seems poised to rally further as OPEC+ signals discipline in easing cuts and as U.S. stockpiles continue to decline,” said Edward Moya, senior market analyst at OANDA.