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Oil Price Stays Up Despite Forecast-Beating US NFP Data

Oil prices remained stable on Friday as traders reacted to mixed US jobs data. US Non-Farm Payrolls data. WTI price was up by 0.1 percent to trade at $84.00 per barrel, while Brent crude rose by a similar margin, trading at $87.61 per barrel at the time of writing.  Furthermore, the commodity is on course to record the fourth successive weekly gain, with its gains this week topping 3 percent as of press time.

Projections of a spike in the demand for oil in the summer were confirmed on Wednesday when the Energy Information Administration announced that crude oil inventories declined by 12.157 million barrels in the week ending July 3, substantially lower than the forecast figure of 0.4 million barrels. Notably, that was the first weekly decline after four consecutive weeks of gains.

A weaker US dollar has been a key driver of the spike in oil prices in recent days, and US economic data will play a key role in defining its trajectory. The June NFP data came in at 206k in June, exceeding the forecast figure of 191k. This will strengthen the US dollar’s standing, which could potentially put oil prices under pressure.  That said, the unemployment rate rose to 4.1 percent in June, which will weigh down on the dollar’s strength.

Elsewhere, Hezbollah fired over 200 missiles towards Israel on Thursday, raising the geopolitical premium on oil prices. However, reports of a breakthrough in the Israel-Hamas ceasefire negotiations could neutralize the impact heading into the weekend.

Technical analysis

The momentum on Brent crude price signals control by the sellers, and the upside will likely continue if the action stays above 87.28. The buyers will likely encounter the first resistance at 87.66. A break past that mark will strengthen the momentum to rise further and test 80.00. Alternatively, a move below 87.05 will signal control by the sellers. That could see the first support established at 85.40, but extended control by the sellers could move the action lower to test 86.75.