Oil prices whipsawed on Thursday, initially rallying before erasing gains to trade near seven-week lows. The volatile session reflected conflicting signals, as resilient US employment data stoked worries over persistent inflation and higher-for-longer interest rates that could crimp economic growth and fuel demand.
After surging over $84 earlier, Brent crude futures for July delivery ultimately clung to a 40 cent, or 0.5%, gain at $83.84 per barrel by 1:32 PM GMT. US West Texas Intermediate (WTI) crude for June delivery rose 27 cents, or 0.3%, to $79.27, paring an earlier spike above $79.90.
The tepid rebound came one day after a 3% plunge that dragged oil benchmarks to their lowest levels since mid-March. Crude prices were initially buoyed Thursday by speculation the US could move to refill its strategic petroleum reserves if WTI breaks below $79.
“The oil market was supported by speculation that if WTI falls below $79, the U.S. will move to build up its strategic reserves,” said Hiroyuki Kikukawa, president of NS Trading, in a potentially bullish development for prices.
However, those prospects quickly faded as the Labor Department reported new jobless claims unexpectedly held steady last week near multi-decade lows of around 230,000. The tight labor conditions reinforced fears the Federal Reserve will feel compelled to press on with its most aggressive policy tightening campaign in decades to wrestle inflation under control.
The latest jobs figures cast a cloud of uncertainty just one day after the Fed warned that stubbornly high inflation could warrant further rate hikes despite keeping borrowing costs on hold at its May meeting. Policymakers also projected softer economic growth for this year, which could ultimately dent demand for crude.
Confounding the murky supply-demand outlook, OPEC and its allies have yet to decide whether to extend voluntary production cuts beyond June, though sources say an extension is possible if the consumption outlook remains sluggish.
Broader geopolitical risks also continue to loom, buffeting prices. While a potential ceasefire between Israel and Hamas raised hopes of easing Middle East tensions, Israeli PM Netanyahu remained defiant, vowing assaults on the Gaza Strip.
Overall, the tug-of-war between economic headwinds and supply constraints leaves oil prices unmoored, seesawing with every new high-impact data point or geopolitical flare up. Sites optimized for search need engaging content capturing market volatility.
