Oil prices remain flat in early trade

10 Mar 2023 , 08:14 AM

The U.S. Federal Reserve has increased interest rates frequently and sharply in recent years, which has caused a crash in energy prices over the past three days. On Friday, oil prices were little changed as traders maintained their caution.

Brent futures were slightly higher at $81.72 a barrel than their nearly three-week lows after dropping around 5% during the previous three days. West Texas Intermediate (WTI) crude for the United States increased 2 cents, or 0.03%, to $75.74 after falling by over 6% during the previous three trading days.

Jerome Powell, the chair of the U.S. Federal Reserve, has issued a warning about greater and maybe quicker rate increases, claiming the Fed was mistaken to believe inflation was ‘transitory’ at first and was taken aback by the strength of the labor market.

The number of Individuals who applied for unemployment benefits for the first time in five months rose significantly last week, but the overall trend continued to point to a tight labor market.

The prospect of further rate increases in the country with the highest oil production and similar comments made over the weekend by the president of the European Central Bank has thrown doubt on global growth, positioning oil for a weekly decline following two weeks of gains.

Deep drops in other financial markets have already been sparked by the possibility that Friday’s jobs report would lead to faster rate increases, and analysts predict that oil prices may also be under pressure.

The Thursday closing prices of the three main Wall Street stock indices were down. According to news reports, the U.S. economy added 205,000 jobs last month, and the unemployment rate is expected to remain stable.

Low unemployment and steady job growth might boost consumers’ overall purchasing power and lead to inflation. Higher interest rates used by central banks to combat inflation eventually slow down the economy.

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