Oil prices dipped Friday morning after the U.S. jobs report signaled weaker-than-expected economic growth. Brent crude, a global benchmark, floated to $66 a barrel in early morning trading before slipping to $64.50 as of 10 a.m. EDT.
U.S. employers added 223,000 jobs in April, less than the 224,000 jobs expected, the Labor Department reported Friday. The agency attributed the slowdown in employment growth in part to cheaper oil prices, which have fallen precipitously from last year’s levels, when oil was trading above $100 a barrel. The price decline has prompted widespread layoffs among U.S. oil and gas companies struggling to earn profits on expensive drilling projects.
Employment in oil and gas extraction fell by 3,000 jobs in April, while mining-related jobs dropped by 10,000 positions, the labor report said. Since the start of 2015, employment across the mining sector has dropped by 49,000 jobs, more than offsetting the 41,000 positions gained during all of 2014.
Nevertheless, the unemployment rate in April dropped to 5.4 percent, its lowest level since May 2008.
The U.S. jobs data helps determine the short-term direction of the dollar, which fell Friday against most of its major peers. Since oil is traded in U.S. currency on the global market, the dollar’s dips and falls have a significant impact on crude prices, the Wall Street Journal reported. “At least today, oil prices are going to follow the dollar very strongly,” Daniel Ang, a Singapore-based investment analyst with Phillip Futures, told the newspaper ahead of the U.S. jobs report.
The Bloomberg Dollar Spot Index, which tracks the U.S. greenback against 10 major currencies, lost 0.2 percent to 1,163.56 as of 9:07 a.m. EDT, Bloomberg News reported.
The U.S. benchmark crude, West Texas Intermediate, fell by 31 cents to $58.63 a barrel as of 10:15 a.m. EDT.
The Labor Department also revised its data for March. The agency previously reported that employers added 126,000 positions that month -- the weakest pace of job growth since December 2013. But Friday's report was even worse, showing employers only added 85,000 positions in March.
Analysts speculated that the weak economic data would prompt the U.S. Federal Reserve to keep interest rates low at its June meeting. The central bank met last week and voted against an interest-rate hike; the last such hike was in 2006.
Raising interest rates would affect the dollar’s strength, in turn influencing the price of oil. A weaker dollar could boost buying interest in oil, benefiting other economies while straining the U.S. jobs market, the Journal noted.