Oil settles down 2%, big weekly drop after US jobs data

NEW YORK, Sept 6 (Reuters) - Oil prices settled 2% lower on Friday, with a big weekly loss after data U.S. jobs data was weaker than expected in August, which outweighed price support from a delay to supply increases by OPEC+ producers.

Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel, their lowest level since Dec. 2021. U.S. West Texas Intermediate crude futures fell $1.48, or 2.14%, to$67.67, their lowest since June 2023.

For the week, Brent declined 10%, while WTI dropped around 8%.

U.S. government data showed employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown that may not warrant a big interest rate cut from the Federal Reserve this month.

"The jobs report was a little soft and implied that the economy in the U.S. is on the slide," Bob Yawger, executive director of energy futures at Mizuho.

Concerns around Chinese demand also kept pressuring oil prices, Yawger said.

On Thursday, Brent settled at its lowest since June 2023 despite a withdrawal from U.S. oil inventories and a decision by OPEC+ to delay planned oil output increases.

U.S. crude stockpiles fell by 6.9 million barrels to 418.3 million barrels last week, compared with a projected decline of 993,000 barrels in a Reuters poll of analysts.

Washington is warning against Nippon Steel’s takeover of U.S. Steel, saying it would create national security risks.

Signals that Libya's rival factions could be closer to an agreement to end the dispute that has halted the country's crude exports also pressured oil prices this week. Exports remained mostly shut in but some loadings have been permitted from storage.

Bank of America lowered its Brent price forecast for the second half of 2024 to $75 a barrel from almost $90 previously, it said in a note on Friday, citing building global inventories, weaker demand growth and OPEC+ spare production capacity.

The U.S. active oil rig count, an early indicator of future output, remained unchanged at 483 this week, energy services firm Baker Hughes (BKR.O), opens new tab reported on Friday.

Money managers cut their net long U.S. crude futures and options positions in the week to Sept. 3, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

"Provided the situation in the Middle East does not escalate further, the oil price is likely to tread water," the Commerzbank analysts said.

A string of data releases from the U.S. kept a floor under oil prices: retail sales beat analysts' expectations, and fewer Americans filed new jobless claims last week, sparking renewed optimism around economic growth in the biggest oil market.

Oil prices could lack direction until the U.S. Federal Reserve decides whether to cut interest rates at its September meeting, independent oil analyst Gaurav Sharma said.

Low liquidity likely fed price volatility this week as many European and North American investors were still on holiday, UBS analyst Giovanni Staunovo said.

One of the three OPEC+ sources, all of whom declined to be identified by name, said the meeting would serve as a "pulse check" for the health of the market.

Oil has risen in 2024 and was trading around $85 a barrel on Thursday, finding support from Middle East conflict and falling inventories. Concern about higher for longer interest rates and demand has limited gains this year.

The Saudi government communications office did not immediately return a request for comment. OPEC's headquarters in Vienna did not immediately respond to a request for comment.

OPEC+ is currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand, in a series of steps agreed since late 2022.

At its last meeting in June, OPEC+ agreed to extend cuts of 3.66 million bpd by a year until the end of 2025 and to prolong the most recent layer of cuts - a 2.2 million bpd cut by eight members - by three months until the end of September 2024.

OPEC+ will gradually phase out the cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.

In June, Saudi Energy Minister Prince Abdulaziz bin Salman had said OPEC+ could pause or reverse the production hikes if it decided the market is not strong enough.

The JMMC usually meets every two months and can make recommendations to change policy which could then be discussed and ratified in a full OPEC+ ministerial meeting of all members.

Italy's renewable power output overtakes fossil fuels for first time

MILAN, July 18 (Reuters) - Italy's power production from renewable sources surpassed fossil fuel output for the first time during the first six months of this year, the power grid operator Terna (TRN.MI), opens new tab said on Thursday.

On 22 June, hourly production from green sources reached a historic peak of 33.2 gigawatt (GW) in Italy, the grid operator said in a statement.

The figures are a boost for Italy's efforts to pivot towards cleaner forms of generation. Under its energy and climate plan (PNIEC), Italy plans to increase the electricity produced by renewables to 63% of the total by the end of this decade.

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