Oil Falls As Weak U.S. Jobs Data Adds to Demand Worries

 

Crude oil futures fell on Friday and ended the week more than 2 percent lower as disappointing jobs data from the United States cast doubt about the strength of economic growth in the world's biggest oil-consuming economy.

U.S. jobs figures showed nonfarm payrolls increased by just 142,000 in August, well below forecasts of 225,000 and the smallest rise eight months.

"U.S. economic growth was supposed to counter the slowing in China and Europe and the payrolls report threw a little cold water on that idea," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Brent crude for October delivery fell $1.01 to settle at $100.82 a barrel, having dropped to $100.35 intraday. The last time Brent was priced under $100 was in June 2013.

U.S. October crude fell $1.16 at settle at $93.29 a barrel.

The weekly drop was Brent's third in four weeks and the sixth in the past seven weeks for U.S. crude.

Oil prices extended losses after U.S. President Barack Obama voiced scepticism about a ceasefire in Ukraine and said that the agreement must last if sanctions on Russia are to be lifted.

Ukraine and pro-Russian rebels agreed to a ceasefire on Friday, a first step to cool a conflict that has soured relations between Moscow and the West.

Obama said at the same news conference that key NATO allies were ready to join in military action to defeat Islamic State militants in Iraq.

"Sanctions on Russia remaining in place keeps the market concerned about demand and Europe's economy," said Phil Flynn, analyst at Price Futures Group in Chicago.

The dollar weakened against a basket of currencies after the U.S. jobs data but recovered later. Oil prices fell $1 on Thursday after a European Central Bank interest rate cut led to a spike in the U.S. dollar.

A stronger dollar can depress demand for oil by making it more expensive for holders of other currencies to buy the dollar-denominated commodity.

"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 U.S. currency. We would need to see a weaker dollar and signs of improving demand for oil prices to rise much on a sustainable basis."

Rising U.S. production, a glut of crude in the Atlantic basin and Asia, together with the potential for rising exports from OPEC members Libya and Iran, have added downward pressure on oil prices.

Money managers cut their net long U.S. crude futures and options positions in the week to Sept. 2, the U.S. Commodity Futures Trading Commission said on Friday. (Additional reporting by Christopher Johnson in London and Jacob Gronholt-Pedersen in Singapore; Editing by Marguerita Choy and Lisa Shumaker)