DTN Oil

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied more than 4% on Friday after U.S. non-farm employment data showed job gains in April exceeded market consensus for the 13th month in a row, as the unemployment rate unexpectedly declined to a 52-year low 3.4%, defying efforts by the U.S. Federal Reserve to slow the red-hot labor market.

U.S. employers added 253,000 new jobs last month, a slightly higher figure than 178,000 jobs expected by the economists and 165,000 positions opened in March, according to data released this morning by the U.S. Bureau of Labor Statistics. What's more surprising, the unemployment rate fell back to a multi-decade low 3.4%, while average wages unexpectedly accelerated, reflecting fresh inflationary pressures in the face of a slowing economy.

Average hourly earnings rose at a significantly faster pace of 0.5% in April, up by 0.2% from the prior month. Fed officials closely monitor compensation metrics as strong pay gains have given Americans the ability to keep spending, exerting upward pressure on prices. Employment growth was once again broad-based, reflecting gains in professional and health care services followed by leisure and hospitality. But, even in manufacturing sectors that remained in downturn for months now, according to some metrics, employment expanded by 11,000. The latest figures underscore the resilience of the labor market despite growing concerns about high interest rates, inflation and tightening credit conditions that are projected to hit the economy sometime in the second half of the year. While some businesses have paused hiring or laid off workers, others are still boosting pay in an effort to fill open positions.

That presents a unique set of challenges for the Federal Reserve that has been raising interest rates at the most aggressive clip in decades to slow the labor market and just this week signaled the end to its rate hiking campaign. Fed officials raised federal funds rates for the 10th consecutive time on Wednesday to a 5%- 5.25% target range - the highest level since September 2007. In a statement released after the rate decision, the Federal Reserve replaced previous guidance that "some additional policy firming (rate hikes) may be appropriate" to "the Committee will closely monitor incoming information, its rate hikes so far and the lags with which they affect the economy and inflation."

"That's a meaningful change, that we're no longer saying we anticipate more hikes," said Federal Reserve Chairman Jerome Powell at the press conference following the rate announcement but added that "our future policy actions will depend on how events unfold... we are prepared to do more if greater monetary policy restraint is warranted."

At settlement, NYMEX June West Texas Intermediate futures advanced $2.78 to $71.34 bbl, while the international crude benchmark ICE Brent for July delivery rose to $75.30 bbl, up by $2.80 bbl on the session. NYMEX June RBOB futures firmed 5.31 cents to $2.3790 gallon, and June ULSD futures rose 7.60 cents to $2.3147 gallon.