The price of oil rose slightly on Friday, but is preparing to record the largest weekly drop (by about 6%) in three months due to uncertain demand prospects and easing tensions in the Middle East. Investors are also concerned about the prospect that the Fed will keep rates at the current level for a longer time, which will negatively affect the US economy and oil demand.
Meanwhile, the negative dynamics of the US currency provides some support for oil. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.08% to 105.23 (the lowest value since April 11).
The market is now looking towards U.S. economic data and indicators of future crude supply from the world's top producer. Later today (at 12:30 GMT), a key report on the US labor market will be presented, which will help clarify the state of the economy and may affect the prospects for easing the Fed's monetary policy. In the first quarter of 2024, the economy created an average of 276 thousand jobs per month, compared with 212 thousand per month in the fourth quarter of last year. Thanks to steady recruitment, few people have been left without a job. The unemployment rate has been below 4.0% for 26 consecutive months. This is more than the total number of months when the unemployment rate was below 4% in the previous 50 years combined. Despite the obvious strength of the labor market, there is a downward trend in the number of job ads, fewer and fewer small businesses want to hire employees, and news about layoffs continues to appear. Despite these obstacles, sustainable spending and economic growth should contribute to further job growth. According to forecasts, the unemployment rate did not change in April (3.8%), and the number of employed increased by 238 thousand after an increase of 303 thousand in March.
Gradually, the focus of investors' attention is shifting to the next OPEC+ meeting. Sources said OPEC+ members may extend their voluntary oil production cuts by 2.2 million barrels per day beyond June if oil demand does not recover, but the group has not yet begun formal negotiations ahead of the June 1 meeting.