HOUSTON- Oil prices rose above $61 a barrel after the head of the US Federal Reserve said the central bank will act “as appropriate” to sustain an economic expansion in the world’s biggest economy that has been pressured by uncertainty over global trade.
Global benchmark Brent crude settled at $61.54 a barrel, up 59 cents, or 1 percent, while US West Texas Intermediate (WTI) crude ended 22 cents, or 0.4 percent, higher at $56.52.
Both benchmarks had declined earlier on concerns over slipping US job growth and continued US-China trade tensions, despite recent diplomatic progress.
The Federal Reserve has an obligation “to use our tools to support the economy, and that’s what we’ll continue to do,” Fed Chair Jerome Powell said at the University of Zurich, sticking to a phrase that financial markets have read as signaling further interest-rate reductions ahead. The Fed cut rates by a quarter of a percentage point in July.
Crude prices “are working back up right now,” said Bill Baruch, president at Blue Line Futures LLC in Chicago. Comments by Powell that indicate further interest rate reductions are one factor that would help keep “a bid in the market ahead of the weekend.”
Oil prices had fallen earlier in the session as US government data showed the nation’s job growth slowed in August for the seventh month in a row, with nonfarm payrolls expanding by 130,000, about 28,000 less than economists polled by Reuters had forecast.
Global oil demand could grow by just 900,000 barrels per day (bpd) in 2019 and 2020, UBS oil analyst Giovanni Staunovo said in a note analyzing oil market trends.
Other forecasts of oil demand growth have been reduced to around 1 million bpd, down from earlier predictions of about 1.3 million bpd, analysts said.
“We’re leaving the US driving season,” said Robert Yawger, director of energy futures at Mizuho in New York. “It’s a very vulnerable position. The biggest worry is concerns about demand growth and that’s a function of the (US-China) trade war.”
The prolonged trade dispute between the United States and China, the world’s second-largest oil consumer, has had a dampening effect on oil prices, though they have risen over the year thanks partly to production cuts led by the Organization of the Petroleum Exporting Countries and Russia to drain inventories. – Reuters