Oil prices settled more than 2 per cent lower in the previous session as supply concerns driven by Israel-Hamas tensions eased, while jobs data raised expectations the US Federal Reserve could be done hiking interest rates in the biggest oil consuming economy. 

US growth slowed more than expected in October, while wage inflation cooled, pointing to an easing in labor market conditions. This boosted the fact that the Fed may not raise interest rates further. The US Fed held interest rates steady last week, while the Bank of England kept rates at a 15-year peak, supporting oil prices as some risk appetite returned to markets.

Brent crude futures were down $1.92, or 2.3 per cent, to $84.89 a barrel. US West Texas Intermediate crude futures fell $1.95, or 2.4 per cent, to $80.51 a barrel. Both crude oil benchmarks settled down more than 6 per cent on the week, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a November 17 expiry, settled 2.8 per cent lower at ₹6,699 per bbl, having swung between ₹6,680 and ₹6,964 per bbl during the session, against a previous close of ₹6,892 per barrel.

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What's weighing on crude oil prices?

-China's services activity expanded at a slightly faster pace in October, sales grew at the softest rate in 10 months and employment stagnated as business confidence waned, showed a private sector survey, according to Reuters.

-The data followed a reading from the National Bureau of Statistics on Wednesday that showed China's manufacturing activity unexpectedly contracted in October.

-On the supply side, Saudi Arabia is expected to reconfirm an extension of its voluntary oil output cut of 1 million barrels per day through December, based on analyst expectations.

-US energy firms this week cut the number of oil and natural gas rigs operating to their lowest since February 2022, energy services firm Baker Hughes said on Friday, according to Reuters.

US Fed Policy: FOMC votes unanimously to keep key rates unchanged at 5.25-5.5% for second straight meeting

Where are prices headed?

Analysts highlighted that crude oil witnessed high volatility and recovered from 1-month lows in the international markets as gains in both US dollar index and bond yields were capped. Doubts over further interest rate hikes from the US Fed pushed the dollar index and the US 10-year bond yields lower. The dollar index slipped below 106 marks and the US 10-year bond yields also slipped below 4.70 per cent. 

‘’The Bank of England also kept interest rates unchanged which supported crude oil prices. However, demand concerns from the European Union and China are restricting gains. We expect crude oil prices remain volatile. Crude oil is having support at $81.30–80.50 and resistance is at $82.70-83.40. In INR crude oil has support at ₹6,810-6,740 while resistance at ₹6,955-7040,'' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.