US Crude Oil Settles Lower Below $86 a Barrel

Oil derrick with sunset
Harold Sund | Image Bank | Getty Images

Oil prices were little changed on Friday after data showing U.S. job growth offset statements by U.S. Republican lawmaker John Boehner indicating deadlock in talks to avert a U.S. budget crisis.

Brent crude futures settled 1 cent lower on the day at $107.02 per barrel, bringing weekly losses for the global benchmark crude to nearly 4 percent. U.S. crude settled down 33 cents at $85.93. Both benchmarks had traded in positive territory earlier on Friday.

U.S. Labor Department data on Friday morning showed that nonfarm payrolls rose by a larger-than-expected 146,000 in November, against analyst expectations for slower job growth in a Reuters poll. The U.S. unemployment rate fell to a four-year low of 7.7 percent.

House of Representatives Speaker John Boehner said that there was "no progress to report'' in budget talks with the administration of President Barack Obama as the two sides try to hash out a budget deal to avoid the tax increases and spending cuts which would be triggered automatically in the new year if agreement is not reached.

A separate report showed U.S. consumer confidence has plummeted to its lowest level since August. The Thomson Reuters/University of Michigan's preliminary confidence reading fell to 74.5 from 82.7 a month earlier.

"Oil got a boost from the jobs numbers, but the consumer confidence pulled us back some and now traders will have to decide if they want to be short going into the weekend with the situation in the Middle East still so volatile,'' said Phil Flynn, analyst at Price Futures Group in Chicago.

Protests surged around Egypt's presidential palace on Friday as opposition groups opposed President Mohamed Mursi's recent decree that expanded his powers, after clashes resulted in several deaths this week.

Nearing the Cliff

With about three weeks left before the so-called "fiscal cliff'' deadline in the United States, Boehner told reporters that President Obama was taking a "my way or the highway'' approach to negotiations.

The economic fallout from the ``fiscal cliff,'' which some say could send the U.S. economy back into recession, could hamper oil demand in the world's biggest consuming country.

Meanwhile, U.S. Federal Reserve policymakers are scheduled to meet Dec. 11-12 to review monetary policy. OPEC ministers will meet on Wednesday, though analysts do not expect the group of oil exporting countries to alter output policy.

Oil traders will also be watching Chinese data due on Sunday that may show the pace of growth quickened in the country's factory output, investment and retail sales during November, thanks to recent pro-growth policies. More gloomy economic forecasts from the euro zone could help to keep downward pressure on oil prices.

The central banks of Germany and Austria on Friday forecast anemic economic growth in 2013, with the German Bundesbank citing the risks of a recession, a day after the European Central Bank cut its own forecasts for the euro zone region.

The U.S. dollar gained against a basket of foreign currencies after Friday's jobs data, on speculation the U.S. Federal Reserve may need to adopt fewer stimulus measures which can weaken the greenback.

A stronger dollar often leads to weaker prices for dollar-denominated commodities like oil.

Economic worries on both sides of the Atlantic have curbed investor appetite for riskier assets, putting the Thomson Reuters-Jefferies CRB index, a bellwether for commodities, in negative territory so far this quarter.

U.S. heating oil futures slid on Friday, but gasoline futures gained 0.4 percent to around $2.607 per gallon in New York.