Brent crude futures were up $1.17, or 1.51%, at $78.76 a barrel, while U.S. West Texas Intermediate crude futures were up $1.62, or 2.26%, to $73.82 by 10:42 CST (1642 GMT).
Both benchmarks are on track to end the first week of the year higher, rebounding from losses on Thursday triggered by hefty increases in U.S. gasoline and distillate stocks.
Expectations were tempered by a U.S. government report showing employment grew in December, which may limit interest rate easing in the new year, and a major bank’s note on oil stocks.
U.S. employers hired more workers than expected in December while raising wages at a solid clip, prompting financial markets to dial back expectations that the Federal Reserve would start cutting interest rates in March.
“This report lowers the probability of the Fed cutting in March and confirms our view that the Fed will not begin cutting as soon as the markets expect,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
Bank of America in a research note on Friday said it was taking a defensive stance toward oil stocks because of the long-term price forecast for oil.
Bank of America expects “the $70-$90 (a barrel) Brent trading range in place since OPEC+ intervened to hold. But the risk is a permanently backward oil curve steepened by spare capacity that is a headwind for sector value.”
Benchmark prices dipped from earlier highs after Bank of America released its note.
“Our 2024 base case is $80 Brent,” Bank of America added. “But recognizing perpetual backwardation as a new normal our 2-yearforward (long-term) price deck drops to $75 Brent / $70 WTI from 2026.”
Maersk announced it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions.
As the threat of the conflict expanding persists, Blinken was set to travel to the Middle East for a week of diplomacy, the State Department said.
Reporting by Erwin Seba; Additional reporting by Robert Harvey and Noah Browning in London, Sudarshan Varadhan in Singapore; editing by Barbara Lewis, Jason Neely, Tomasz Janowski, David Gregorio and Jonathan Oatis – Reuters