DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Friday's session 2.5% higher after a stronger-than-expected U.S. employment report diminished the outlook for recession early next year but complicated the outlook for Federal Reserve's efforts to bring inflation back to its 2% target in a timely manner.

U.S. labor market delivered yet another surprise to the upside in November, adding 199,000 jobs and the unemployment rate fell back to a four-month low 3.7%, showed data released Friday morning by the U.S. Bureau of Labor Statics. The labor force participation rate increased to 62.8%, meaning more workers are entering the labor market towards the end of the year. What's notable is employment gains were spread out across different sectors of the economy, including healthcare, up 77,000 from the previous month, government, up 49,000, and leisure and hospitality, up 40,000 from October's 19,000 increase, which could signal a reacceleration of activity for the restaurant and travel industries.

Equities gained, the U.S. dollar rallied, and WTI futures jumped back above $71 bbl as investors continued to assess the impact of the November employment report on the path of the federal funds rate next year as recession still seems to be far in the distance.

This week's macroeconomic data could have suggested that the labor market is indeed losing its post-pandemic momentum, with new job openings falling to a 2-1/2 year low 8.733 million in October and employment in the private sector increased by a modest 103,000 as employers pulled back on new hiring in a "wait-and-see" approach towards the end of the year.

"Restaurants and hotels were the biggest job creators during the post-pandemic recovery. But that boost is behind us, and the return to trend in leisure and hospitality suggests the economy as a whole will see more moderate hiring and wage growth in 2024," said Nela Richardson, chief economist at Automatic Data Processing.

At settlement, WTI futures for January delivery on NYMEX jumped $1.89 to $71.23 bbl after the contract plunged below $70 bbl on Wednesday for the first time since July. Gains for WTI come despite the U.S. dollar index rallying 0.46% against a basket of foreign currencies to settle the session at 103.983.

The international crude benchmark Brent contract on ICE advanced $1.79 per bbl, pushing above $75 per bbl to settle at $75.84 per bbl. NYMEX RBOB January futures gained $0.0486 from a two-year low to settle at $2.0498 per gallon. NYMEX ULSD futures for January delivery increased $0.0318 to $2.5810 per gallon.

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