Investing.com -- Oil prices rose Friday, boosted by signs of underlying strength in the U.S. economy as well as the potential for supply disruptions in the crucial Middle East region.
By 09:15 ET (14.15 GMT), the U.S. crude futures traded 1.9% higher at $73.64 a barrel and the Brent contract climbed 1.5% to $78.78 a barrel.
Jobs data points to healthy U.S. economy
Data released earlier Friday showed that the U.S. economy added far more jobs than expected in December, as nonfarm payrolls increased by 216,000 last month, rising from a downwardly revised mark of 173,000 in November.
While this strong number has resulted in the tempering of expectations for the Federal Reserve to start cutting interest rates in March, it still suggests that the underlying U.S. economy, the largest in the world and biggest consumer of crude, remains healthy despite the series of interest rate hikes last year to tame inflation.
Maersk diverts ships away from Red Sea
Also supporting the crude market are the ongoing concerns over Yemen's Iran-backed Houthis targeting shipping in the Red Sea, disrupting supply from this crucial oil-rich region.
Shipping giant Maersk said, in a statement Friday, that it would divert its vessels away from the Red Sea region for the "foreseeable future", with the world's second-largest shipper calling the situation in the area -- a crucial trade artery between Europe and Asia -- "highly volatile."
U.S. oil product inventories rise sharply
While these disruptions to Middle East supplies drove a recovery in crude this week, the rebound was limited by data showing a massive build in U.S. oil product inventories in the final week of 2023.
The reading indicated that demand remained weak in the world’s largest fuel consumer.
“This week’s EIA release showed U.S. commercial crude oil inventories down by 5.5MMbbls over the week, although there were large builds on the product side. Gasoline inventories increased by 10.9MMbbls and distillate stocks grew by 10.09MMbbls,” analysts at ING said, in a note.
A rebound in the dollar also weighed on oil prices, as the greenback raced to over three-week highs on growing uncertainty over the Federal Reserve’s plans for interest rate cuts.
(Ambar Warrick contributed to this article.)