Oil futures: Crude rally stalls as Yellen raises US recession concerns
Quantum Commodity Intelligence – Crude oil futures Monday were lower after US Treasury Secretary Janet Yellen said that a recession for the US was "not completely off the table", although were largely holding the previous-week's gains.
Sep23 ICE Brent futures were trading at $77.89/b (1715 GMT), compared to Friday's settle of $78.47/b.
At the same time Aug23 NYMEX WTI was trading $73.23/b, versus Friday's close of $73.86/b.
Oil benchmarks had rallied by more than 4% last week, largely on the back of Saudi Arabia announcing It would extend its additional 1 million bpd output cut into August, joined by Russia with a pledge to trim exports by 500,000 bpd next month.
But Yellen's comments brought wider US economic concerns back to the forefront, particularly after the Federal Reserve had flagged further interest rate hikes, while the June jobs report was the weakest showing since December 2020.
"We would expect, with the job market as strong as it is now, to see a slower pace of ongoing job gains," Yellen said. "Prime age labor force participation is at the highest level in several decades, so we've seen this strong job market attract workers back to it. But as that stabilizes at a high level, we should expect the monthly job gains to be coming down toward a more normal level."
The June jobs report found the nation's unemployment rate fell to 3.6% as the economy added 209,000 jobs — marking the lowest number of jobs added since December 2020.
"June hiring data came in short of expectations and signal the recent trend in hiring is clearly lower. But continued economic resilience and generally robust incoming data still give the Fed the green light to resume monetary policy tightening on July 26," said Wells Fargo in a research note.
In Asia, China's inflation was flat in June while producer prices eased more than expected, official data showed, in the latest sign of weakness in the world's second-largest economy. The consumer price index for June was down from the 0.2% seen in May, according to the National Bureau of Statistics, highlighting slowing domestic demand.
Meanwhile, the US Energy Department announced its plan on Friday to acquire an additional 6 million barrels of crude oil for the SPR, scheduled for delivery in October and November, doubling the department's yearly purchase to 12 million barrels.
