Oil rebounds from lows but still sees worst week since March.

"On Friday, Wall Street adhered to the age-old wisdom of "sell the rumor, buy the fact," and the oil market mirrored this sentiment. Crude oil prices experienced a resurgence alongside stock markets, even as the US dollar failed to set new highs. This trend unfolded in the aftermath of a robust US jobs report for September, which confirmed the ongoing bond market sell-off.

 In New York, the price of West Texas Intermediate (WTI) crude for November delivery increased by 48 cents, or 0.6%, settling at $82.79 per barrel. This marked a recovery from the recent two-session, 8% dip. However, WTI briefly touched a fresh five-week low of $81.53 during the day.

 Meanwhile, London's Brent crude, associated with the most-active December contract, saw an increase of 54 cents, or 0.6%, settling at $84.58. This positive turn followed an 8% drop between Wednesday and Thursday. Similar to WTI, the global crude benchmark experienced a five-week low, falling to $83.50 during the latest session.

 The overall picture for the week painted a somber picture, with WTI witnessing a 9% decline and Brent falling by 11%. It's worth noting that this week marked the worst performance for both benchmarks since March.

 The release of the US Labor Department's report, which revealed a surge of 336,000 new non-farm payrolls for September, elicited a renewed sense of optimism on Wall Street. This figure was the highest since January and significantly exceeded the 187,000 reported in August, as well as the average Wall Street economist forecast of 170,000 for the month.

 In response to this, money market traders adjusted their bets, now assigning a 30% probability to the Federal Reserve raising rates by a quarter point in November. This probability had doubled in just one week.

 The Federal Reserve has consistently cited factors like an overheated labor market, robust wage growth, and soaring energy prices as drivers for persistently high inflation levels, surpassing their 2% target. As a result, the central bank had implemented 11 interest rate hikes between March 2022 and July 2023 to combat inflation.

 Before this week's slump, oil prices had reached one-year highs, with Brent exceeding $97 a barrel and WTI surpassing $95.

 Despite the resurgence in crude prices alongside stocks on Friday, the US dollar and Treasury yields showed only limited movements. This likely reflects profit-taking by currency and bond traders who had anticipated the strong jobs report.

 However, some analysts remain cautious about the future of oil prices, particularly if the dollar and yields make a significant comeback due to the possibility of a Fed rate hike following the impressive non-farm payrolls report. Ed Moya pointed out that while the major correction in oil prices might be nearing its end, the recent surge in the dollar post-NFP could potentially draw WTI crude towards the $80 level."

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