Brent Crude Holds at $77 on Strong Jobs Report, Potential Rate Cut Delay

Oil prices refrained from responding to geopolitical pressure on Monday, instead dropping slightly on solid numbers from the U.S. jobs report and a caution over interest rate cuts.  The latest report from the U.S. Bureau of Labor Statistics showed accelerating job growth for January, with wages seeing a two-year-high increase.

However, analysts now fear that the accelerated jobs growth could impact the Federal Reserve’s tentative timeline for interest rate cuts.  The data “pushes the timeline for Fed’s highly anticipated cutting cycle out into the second quarter”, Jeff Schulze, head of economic and market strategy at ClearBridge Investments, told Reuters on Monday. Fed Chair Jerome Powell told CBS’ 60 Minutes this weekend that while the economy is strong and inflation is falling, interest rate cuts were not likely to happen in the next couple of months. Last Wednesday, Powell said the rate would remain unchanged for now, at around 5.5%, which represents a 23-year high. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest.

After shedding some 7% last week, Brent crude oil prices on Monday at 11:31 ET were holding steady, trading down very slightly by 0.03% at $77.31. West Texas Intermediate (WTI) was trading down 0.25% at $72.10.   Oil markets are not responding to U.S. strikes on Iranian proxy groups in Syria as tensions rise between the U.S. and Iran following the death of three American soldiers in a drone attack in Jordan last week.  Also leading to weaker oil prices has been the rumor of a ceasefire between Israel and Hamas.  “Hopes of a ceasefire between Israel and Hamas drove some of this weakness,” ING analysts said in a note carried by Reuters. “However, for now, a ceasefire does not appear imminent.”