Oil prices rose on May 8 as US recession worries eased on healthy jobs report for April that supported crude to climb 4 per cent before the weekend. Oil edged higher even though the US labour market data could allow the Federal Reserve to keep interest rates higher for a longer period of time. 

Brent crude futures was up $1.41, or 1.9 per cent, at $76.71 a barrel earlier in the day. West Texas Intermediate (WTI) crude gained $1.50, or 2.1 per cent, to $72.84. Brent had finished last week with a decline of about 5.3 per cent while WTI declined by 7.1 per cent even after the rebound. 

Both benchmarks were down for three weeks in a row for the first time since November, which was ''overdone'' according to analysts. The slowdown had prompted investors to flee from risk leading to selloffs. The turmoil in the US banking sector and oil production cuts announced by OPEC+ also added to volatility in oil markets.

 

Prices recover on strong US jobs data

US employment growth and pay gains accelerated in April that resulted in labor-market resilience and recovery in energy stocks on Wall Street on Friday. The nonfarm payrolls increased 253,000 for the month, beating Wall Street estimates for growth of 180,000, according to the Bureau of Labor Statistics. The unemployment rate was 3.4% against an estimate for 3.6% and tied for the lowest level since 1969.

US WTI was up 4 per cent after plunging to over 7 per cent last week as a result of market sell-off on fears of economic recession and that fuel supply would decrease in the world's largest oil-consuming nation.

“Oil’s rebound follows energy stocks’ comeback on Wall Street last Friday after the U.S. reported strong job data, which eased concerns about an imminent economic recession," CMC analyst Tina Teng told news agency Reuters.

 

Oil seeks stability amid OPEC+ cuts 

OPEC’s latest monthly oil market report is due on May 11, providing an updated reading on the demand and supply outlook. Prices will now attempt to find stability as energy traders watch to see if OPEC+ will need to indicate that they are willing to cut production even more.

A round of voluntary output cuts by members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, begin this month and the group holds its next meeting on June 4.

According to Goldman Sachs analysts, concerns over near-term demand and elevated supplies were “overblown". The investment bank kept its forecast for Brent crude at $95 per barrel by December and $100 by April. 

Ole Hansen, head of commodity strategy at Saxo Bank told Reuters that oil’s recent drop looked excessive. “An oversold market condition combined with Brent managing to find support ahead of the March low forced recently established short sellers to seek cover, potentially highlighting that the recent sell-off was overdone," he noted.