- WTI crude oil surges as US labor market data fuels demand optimism.
- Nonfarm Payrolls miss expectations, but wage growth remains strong.
- The labor force participation rate edges higher, supporting the energy demand outlook.
The West Texas Intermediate (WTI) crude oil prices climbed on Friday to around $70.80, buoyed by renewed optimism over energy demand following the latest United States (US) labor market report. While Nonfarm Payrolls (NFP) data revealed a weaker-than-expected 143K job addition in January, the overall labor market resilience and steady wage growth helped drive crude prices higher.
Despite the soft job additions, the US unemployment rate held firm at 4%, aligning with expectations. Wage growth remained solid, with average hourly earnings rising 0.5% month-over-month, in line with forecasts. The year-over-year figure reached 4.1%, surpassing the anticipated 3.9%. Additionally, the labor force participation rate ticked up to 62.6%, reinforcing expectations of sustained economic activity and energy consumption.
It is worth noticing that weak economic data might prompt the Federal Reserve (Fed) to consider sooner rate cuts, and hence economic activity might flourish which could push demand for oil higher and benefit the price.
WTI crude oil is trading above $70.50 per barrel, testing a key resistance level at $71.00. A successful break above this threshold could pave the way for further gains, while immediate support lies at $70.00. Traders will closely monitor upcoming macroeconomic developments for additional market direction.
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