Oil heads for weekly losses as Mideast worries ease, China demand uncertain

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Oil prices fell more than $2 on Friday, on track for a weekly loss as supply concerns driven by Middle East tensions eased, while jobs data raised expectations the U.S. Federal Reserve could be done hiking interest rates in the biggest oil consuming economy.

Brent crude futures were down $2.03, or 2.4%, to $83.82 a barrel at 1:32 p.m. EDT (1832 GMT). U.S. West Texas Intermediate crude futures fell $2.21, or 2.7%, to $80.26 a barrel.

Both benchmarks were on track for weekly losses of more than 6%.

Hezbollah leader Sayyed Hassan Nasrallah, speaking for the first time since the Israel-Hamas war erupted, warned on Friday that a wider conflict in the Middle East was possible but did not commit to opening another front on Israel’s border with Lebanon.

“The market is taking this conflict in its stride, as it looks to be neither a significant demand or supply disruption event,” said John Kilduff, partner at Again Capital LLC in New York.

Meanwhile, U.S. job growth slowed more than expected in October, official data showed, while wage inflation cooled, pointing to an easing in labour market conditions.

The data bolstered the view that the U.S. Federal Reserve need not raise interest rates further.

The Fed held interest rates steady this week, while the Bank of England kept rates at a 15-year peak, supporting oil prices as some risk appetite returned to markets.

But a private sector survey on Friday showed that while China’s services activity expanded at a slightly faster pace in October, sales grew at the softest rate in 10 months and employment stagnated as business confidence waned.

The data followed a reading from the National Bureau of Statistics on Wednesday that showed China’s manufacturing activity unexpectedly contracted in October.

On the supply side, Saudi Arabia is expected to reconfirm an extension of its voluntary oil output cut of 1 million barrels per day through December, based on analyst expectations.

U.S. energy firms this week cut the number of oil and natural gas rigs operating to their lowest since February 2022, energy services firm Baker Hughes said on Friday.

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