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Crude oil futures plunged Friday to end a volatile week, wrapping up a fourth straight weekly decline as worries about the demand outlook in both China and the U.S. overshadowed bullish data earlier in the week on U.S. inventories and fears of a wider Middle Eastern conflict.
The U.S. added 114K non-farm jobs in July, much less than expected, the unemployment rate rose to 4.3% from 4.1%, and average hourly earnings growth fell, all signs of a likely rate cut from the Fed next month after rates were held steady at the central bank’s mid-week meeting.
The disappointing labor market data followed a weak manufacturing report on Thursday, with the Institute for Supply Management saying its manufacturing PMI slumped to 46.8 in July, the lowest reading since November, from 48.5 in June.
Data this week also showed declining manufacturing activity in China, adding to concerns about demand growth after earlier data showed imports and refinery activity lower than a year ago, while Asia’s crude imports in July fell to the lowest in two years due to weak demand in China and India.
Rising Middle East tensions have kept markets on edge after a top Hamas political leader was killed in Tehran, and Iran has promised to retaliate against Israel, raising fears of a wider war.
Front-month Nymex crude (CL1:COM) for September delivery settled -3.6% on Friday, losing 4.7% for the week, to $73.52/bbl, its lowest settlement value since June 4, and front-month October Brent (CO1:COM) ended -3.4% to $76.81/bbl, its lowest close since January 10 and down 4.3% from a week ago.
Front-month September Nymex natural gas (NG1:COM) finished flat on Friday but fell 4.1% this week to $1.967/MMBtu.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)
But concerns over weakening oil demand are outweighing the growing risks to supply.
“Demand risks related to a looming recession are much more significant than the threat to supply that the current geopolitical landscape presents which leaves the fundamental scales tipped in favor of the bears right now,” Sevens Report Research co-editor Tyler Richey told Marketwatch.
Energy (NYSEARCA:XLE), as represented by the Energy Select Sector SPDR Fund ETF, was one of the week’s worst stock market performers, finishing -4.1%.
Top 5 gainers in energy and natural resources in the past 5 days: Eco Wave Power (WAVE) +19.1%, Oil States International (OIS) +12.4%, ZIM Integrated Shipping (ZIM) +11.5%, TransAlta (TAC) +9.7%, Martin Midstream Partners (MMLP) +9.4%.
Top 10 decliners in energy and natural resources in the past 5 days: Nano Nuclear Energy (NNE) -40.1%, Aemetis (AMTX) -30.6%, TPI Composites (TPIC) -24.9%, Endeavour Silver (EXK) -22.2%, Chart Industries (GTLS) -21.8%, ASP Isotopes (ASPI) -21.4%, Nuscale Power (SMR) -20.8%, Comstock Resources (CRK) -20%, Centuri Holdings (CTRI) -19.6%, MP Materials (MP) -19.6%.
Source: Barchart.com
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