Oil prices down as traders await key US jobs report

Crude prices dipped in Asia Friday as traders await a closely watched US jobs report that could provide clues on the health of the world’s biggest economy and the direction of interest rates.

The non-farm payroll report due for release later in the day could determine when the Fed lifts borrowing costs, which would affect the dollar and, in turn, demand for oil.

At around 0650 GMT, US benchmark West Texas Intermediate for delivery in June was down 36 cents, or 0.81 percent, at $43.96 and Brent crude for July dipped 26 cents, or 0.58 percent, to $44.75.

Traders are unlikely to make major moves ahead of the report, CMC Markets chief market strategist Michael McCarthy in Sydney told AFP.

“It will have a direct impact on the US dollar and given that US dollar weakness has been one of the supportive legs for oil prices in particular, it will be an important read.”

A weaker greenback makes crude cheaper for anyone holding other currencies, spurring demand and prices.

Speculation the US central bank could raise rates at its June meeting was sparked this week after two Federal Reserve regional heads expressed support for such a move.

The Fed’s official line is that any decision is dependent on the state of the US economy.

Prices are also getting support from a political crisis in exporter Libya, a fall in US oil production and wildfires that have curbed supplies from Canada.

As much as one million barrels a day may be offline as a result of the wildfires in Canada’s Alberta oil sands region, which mines and ships heavy crude to the United States.