Oil prices recover to end higher after weak US jobs data points to interest rate cuts. By Investing.com

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Investing.com — Oil prices settled higher on Wednesday, recovering from a four-month low, as optimism about faster rate cuts from the Federal Reserve helped offset demand concerns following an unexpected increase in domestic crude inventories.

At 2:30 PM ET (18:30 GMT), it rose 1.1% to $78.39 per barrel, and rose 1.1% to $74.09 per barrel.

Private payroll administrations disappoint

The crude oil market has bounced back from recent lows after data released earlier Wednesday showed May’s rise was slower than expected.

Companies added 152,000 workers during the month, down from a downwardly revised total of 188,000 in the previous month, according to figures from payroll processor ADP. Economists had predicted a reading of 173,000.

The data comes a day after a separate report showed it fell to the lowest level in more than three years in April.

The data, which followed a series of weak U.S. economic developments, added to concerns about slowing demand as economic growth cools, but also signals that the Federal Reserve has cut interest rates this year.

In addition, top oil importer China recorded mixed figures for May.

Oil Sets Steep Losses Amid Demand Fears and OPEC+ Outlook

Oil prices suffered sharp losses this week after the Organization of the Petroleum Exporting Countries and its allies signaled they planned to reverse some production cuts this year.

This measure created a weak outlook for oil prices in 2025, especially if demand stagnated.

“While the market is disappointed that OPEC+ will gradually phase out cuts, it is important to remember that this will only be from October,” ING analysts said in a note.

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“Our balance sheet continues to see oil market tightening in the third quarter. As a result, we believe the magnitude of the sell-off at the front of the forward curve is exaggerated.”

US stocks rise unexpectedly

Oil prices rose 1.2 million barrels in the week to May 31, confusing estimates of a 2.3 million barrel decline, US Energy Information Administration data showed, but that was far less than the report from a day earlier that showed an increase of 4 million barrels.

The data also showed that gasoline inventories increased by 2.1 million barrels and distillate inventories by 3.2 million barrels, compared with estimates for 2.6 million and 3 million barrels respectively, as refineries operated at 95.4% of capacity worked, compared to 94.3% the previous century. week.

The build-up in crude inventories further raised demand concerns at a time when some continue to bet on a seasonal demand recovery in the summer.

“We think oil demand is likely to be quite healthy in the summer and global inventories are likely to decline between July and September, so we still have a positive outlook on oil prices in the summer months,” Roth MKM said.

(Peter Nurse, Ambar Warrick contributed to this article.)

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