Crude oil prices moved sharply higher in early Friday trading as investors reacted to data less supportive of a U.S. rate hike. File photo by Monika Graff/UPI | License Photo
NEW YORK, Sept. 2 (UPI) -- Crude oil prices jumped in early Friday trading on renewed speculation about production moves and dimmed prospects for a U.S. rate hike.
Oil moved sharply lower in recent sessions as data indicate the prospects for a narrowing gap between supply and demand are fading in the midst of increased inventory levels for crude oil.
Crude oil prices in Asian trading shot up on word from President Vladimir Putin that Russia was moving in line behind the prospects for extraordinary action to correct the market. In an interview with the Bloomberg news agency, the president said "economic sense and logic" suggested some form of compromise was needed to stimulate prices.
Lower crude oil prices are hurting oil-centered economies like Russia's and some members of OPEC. Despite caveats mentioned by Putin for Iran, markets took the bait that a production cut was possible from some oil producers.
The price for Brent crude oil was up 2.1 percent to $46.44 per barrel in early Friday trading. West Texas Intermediate, the U.S. benchmark price for oil, rallied 1.9 percent to start the day in New York at $43.97 per barrel.
Friday's gains were supported in part by lackluster jobs data from the U.S. Bureau of Labor Statistics. An increase of 151,000 in non-farm payrolls in August was less than many analysts had expected. Weak labor movements, coupled with a decline in manufacturing productivity and hours worked, could take support for a U.S. rate hike out of the picture.
Economists at the U.S. Federal Reserve have long looked at labor figures to determine whether the U.S. economy can cope with a rate hike. Slow hiring and less productivity could be a restraining factor on wages, which have not kept pace with an otherwise healthy U.S. labor sector. The strength of the U.S. dollar, meanwhile, may not be in favor of lower prices for commodities like crude oil.
Demand factors later in September could put negative pressure on crude oil prices as summer holiday seasons draw to a close. Crude oil prices later today may be influenced by rig data from Baker Hughes, which could provide a gauge for energy sector confidence depending on which way the needle moves.