London: Brent crude oil fell further below $102 a barrel on Friday, heading for a third weekly drop in four as a strong dollar depressed demand and US employment data suggested the world’s biggest oil consumer was growing more slowly than expected.
Oil prices on both sides of the Atlantic fell nearly $1 on Thursday as a cut in interest rates by the European Central Bank led to a spike in the US dollar, making it more expensive for holders of other currencies to buy the dollar-denominated commodity.
US jobs figures on Friday showed nonfarm payrolls increased by just 142,000 last month, well below forecasts of 225,000 and the smallest rise eight months.
Brent was down 15 cents at $101.68 a barrel by 1320 GMT, after closing 94 cents down on Thursday. US crude was 5 cents lower at $94.40 a barrel, having lost $1.09 the previous day.
Both benchmarks were on track to end the week with a loss of more than 1 per cent.
“The main factor driving us down has been the strength of the dollar,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.
“Supply is plentiful, but it has been for some time. The change this week has been the rise of the US currency. We would need to see a weaker dollar and signs of improving demand for oil prices to rise much on a sustainable basis.” Dominick Chirichella, at News York’s Energy Management Institute, said the US jobs data was also negative.
“I view the oil complex as overall bearish right now,” Chirichella said.
US crude oil stocks fell by 905,000 barrels last week, while gasoline stocks dropped by 2.3 million barrels, Energy Information Administration data showed. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 385,000 barrels.
However, rising US production, a glut of crude in the Atlantic basin and Asia, together with the potential for rising exports from OPEC-members Libya and Iran, continued to add downward pressure on oil prices.
Libya’s oil production rose to 725,000 barrels per day (bpd) this week, more than six times the level two months ago, while successful talks between the West and Tehran over its nuclear programme could bring more Iranian barrels to global markets.
“We think any easing of sanctions (on Iran) will likely be negative for oil markets in the short term, but it is unlikely to be the significant sustained bear event for oil markets many may perceive,” Morgan Stanley analysts said in a note.
Morgan Stanley says Iranian exports could recover to 1.5-2 million bpd over the next 12 to 18 months if sanctions are lifted. The country has been exporting slightly more than 1 million bpd in recent months.