Oil futures fell on Friday as US jobs data came in below expectations, tempering economic optimism that had pushed Brent crude during the session to its highest level in four months, and prompting some investors to take profits. US employers slowed hiring in July, with the number of jobs outside the farming sector increasing by 162,000, the Labour Department said, below the median forecast of 184,000 in a Reuters poll.
The disappointing number led many oil investors to sell out of positions after sharp gains in the previous two days. "We've got a pullback from the jobs data, but I suspect we are also seeing some profit-taking before the weekend," said Bob Yawger, director of energy futures at Mizuho Securities in New York. "That said, we are still trading at historically high levels. I wouldn't be surprised if we tested $110, although that won't happen today."
US crude oil futures fell 95 cents to settle at $106.94 a barrel. Despite Friday's decline, the US benchmark ended the week with a 2.1 percent gain. Brent futures fell 59 cents to settle at $108.95 a barrel, after reaching an intraday peak of $110.09, the highest level since April 3. Brent ended the week up 1.66 percent, snapping two weeks of declines.
The premium of North Sea benchmark Brent over US crude, or West Texas Intermediate, widened to settle at $2.01 a barrel, trading in a range between $1.14 and $2.19. Gasoline futures fell with the rest of the energy complex, dropping 3.5 cents to trade near $2.99 a gallon. The downside for oil prices on Friday was limited by concern over supply disruptions in Iraq, Libya and Nigeria.
Libya's oil exports continued to flow at less than half normal rates on Friday as strikes and protests shut major oil terminals in the North African Opec producer, triggering one of the worst disruptions in the past year. These outages helped trim Opec output to a four-month low in July, a Reuters survey published on Wednesday showed. Opec output averaged 30.25 million barrels per day (bpd), down from 30.38 million bpd in June, the survey found. Opec supply looks set to tighten further. Seaborne oil exports from the producer group, excluding Angola and Ecuador, will fall by 490,000 bpd in the four weeks to August 17, an analyst who estimates future shipments said on Thursday.
Iraq's production has come under pressure as Sunni insurgents target its northern pipeline, while technical problems curb output in the south. Nigerian production has been blighted by oil theft, a factor that severely dented Royal Dutch Shell and Eni's second-quarter results. Geopolitical risks were in focus after Israeli Prime Minister Benjamin Netanyahu said Iranian president-elect Hassan Rouhani had shown his true face after Iran's student news agency ISNA quoted him as saying Israel was a "wound" that must be removed.
Iranian state media said unidentified news agencies had distorted Rouhani's remarks. State owned Press TV broadcast footage that showed Rouhani saying a "wound" had been inflicted on the Muslim world by the Israeli occupation of Palestinian land, but made no reference to the "Zionist regime" or the removal of Israel. ISNA later retracted the report.
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