DTN Oil

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange moved lower in the afternoon session Friday. All petroleum contracts posted losses for the second consecutive week after the U.S. employment report showed hiring slowed sharply in October, undercutting the near-term demand outlook while reinforcing the case for the Federal Reserve to hold off further interest rate increases in the coming meetings.

The U.S. economy added 150,000 jobs last month, well below the average monthly gain of 258,000 over the prior 12 months, according to data released Friday morning from the U.S. Labor Department. October's job growth came in below September's stronger-than-expected but downwardly revised total of 297,000 jobs.

With those revisions, employment in August and September combined is 101,000 lower than previously reported. The unemployment rate, meanwhile, ticked higher by 0.1% in October to 3.9%. Employment declined in manufacturing as strikes by the United Auto Workers (UAW) union against Detroit's "Big Three" car makers depressed hiring. Employment growth in leisure and hospitality was little changed in the reviewed month at 19,000 jobs after the industry added an average of 52,000 new jobs over the past 12 months.

In October, average hourly earnings growth for all employees on private nonfarm payrolls eased to 0.2% from September's 0.3% gain, bringing an annualized increase in wages to 4.1% after rising 4.3% in September.

Earlier this week, Institute of Supply Management data showed business activity across the U.S. manufacturing sector dropped back into contraction, hit with the turbulence in the auto sector and overall demand softness from U.S. consumers and businesses.

"Seventy-five percent of manufacturing gross domestic product (GDP) contracted in October, up from 71% reported in September. Of the six biggest manufacturing industries, only one -- food, beverage and tobacco products -- registered growth in October," said Timothy R. Fiore, CPSM, CPM, and chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

Friday's employment report reinforced the case for the Federal Reserve to hold off raising interest rates again this year after lifting them to a 22-year high 5.25%-5.50% range.

Although Fed Reserve Chairman Jeremy Powell called for caution when assessing the path of future rate increases, markets lowered expectations for additional tightening over the next four meetings.

As of Friday afternoon, the CME Group's Fed Watch tool indicates no better than a 20% chance of a rate hike through mid-2024 with odds rising for the first rate cut to take place in June rather than July next year.

At settlement, West Texas Intermediate (WTI) December futures declined to $80.51 a barrel (bbl), down by $1.95 in afternoon trading, and the international crude benchmark Brent for January delivery fell $1.77 to $85.08 bbl. NYMEX December ULSD retreated $0.1017 to $2.9238 per gallon and the front-month RBOB on NYMEX fell back to $2.2010 per gallon, down by $0.0450 per gallon.

Liubov Georges can be reached at liubov.georges@dtn.com