Oil prices experienced a rise on Friday, recovering from significant losses in the previous session. However, they are still on track for a weekly decline, influenced by multiple unsubstantiated reports hinting at a potential Israel-Hamas ceasefire. The market was also influenced by a weaker dollar, anticipating the impact of key nonfarm payrolls data, which is expected to shape expectations for U.S. interest rates.
Brent oil futures for March delivery increased by 0.9% to reach $79.38 a barrel, while West Texas Intermediate crude futures rose by 0.8% to $74.36 a barrel by 20:17 ET (01:17 GMT). Despite the daily uptick, both contracts were heading for weekly losses between 4.4% and 5.2%, marking their worst weekly performance since late October.
The potential Israel-Hamas ceasefire is viewed as a significant development that could de-escalate military tensions in the Middle East, which have been a key support for oil prices. Recent attacks by the Iran-aligned Houthi group in the Red Sea disrupted shipping activity, impacting oil supplies. A ceasefire is expected to alleviate tensions in the region, reducing disruptions to oil supplies.
Investors are also awaiting the nonfarm payrolls data, anticipating its impact on U.S. interest rates. The dollar’s weakness before the release provided some relief to oil prices, although the overall outlook for the dollar remains influenced by expectations of higher interest rates. The Federal Reserve’s recent indication of a cautious approach to early interest rate cuts in 2024 had initially applied pressure on oil prices. Additionally, weak demand signals from China, the top importer, based on underwhelming purchasing managers index readings, have contributed to the downward pressure on crude prices.