By Adedapo Adesanya
The oil market went down by 2 per cent on Friday on the back of a big weekly loss after data from US jobs, with Brent crude declining by $1.63 or 2.24 per cent to $71.06 a barrel and the US West Texas Intermediate (WTI) crude losing $1.48 or 2.14 per cent to trade at $67.67 per barrel.
The data was weaker than expected in August, which outweighed price support from a delay in supply increases by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+).
For the week, Brent declined by 10 per cent while WTI dropped by around 8 per cent.
US government data showed employment increased less than expected in August, but a drop in the jobless rate to 4.2 per cent suggested an orderly labour market slowdown.
This may not warrant a big interest rate cut from the Federal Reserve this month with analysts noting that the jobs report was a little soft and implied that the largest oil-producing economy is on the slide.
Concerns around Chinese demand also kept pressuring oil prices.
Underwhelming demand this year has lowered oil refining output as independent Chinese refiners are particularly sensitive to low margins and prefer to reduce refinery throughput when margins and demand are weak.
In the wider Asian market, refining margins across Asia fell this week to their lowest level for this time of year since 2020, which could lead to more curbs on run rates at Asian refiners, including in China.
As fuel supplies are growing after demand peaked for the summer, margins are now at their lowest in four years.
Sinopec, the largest refiner in Asia, confirmed market concerns about weak fuel demand in China when it reported first-half earnings last month.
Analysts predict additional reductions in refining utilisation in the future due to declining profits and an increase in fuel supply in the face of declining demand, which is concerning for oil demand in Asia, the world’s largest growing market.
Meanwhile, US crude stockpiles fell by 6.9 million barrels to 418.3 million barrels last week.
Prices this week were also influenced by indications that the opposing factions in Libya might be getting closer to reaching a settlement to end the conflict that has stopped the nation’s crude shipments. While most exports were still prohibited, limited loadings from storage were allowed.
The number of active oil rigs in the US, an early predictor of future production, stayed at 483 this week, according to energy services company Baker Hughes.