(Bloomberg) -- Oil posted the biggest weekly gain since July as Federal Reserve Chairman Jerome Powell sought to calm fears of a possible recession following a lackluster jobs report that was seen as dimming the demand outlook.
Futures in New York rose 0.4% Friday, erasing earlier losses. Powell said the most likely outlook for the U.S. and world economy is continued moderate growth, but the central bank was monitoring “significant risks.” The market also drew support from a U.S. report that showed the rig count had declined for the third week, implying a slowdown in domestic oil production.
“The oil market and equities market are reacting positively to remarks by Powell that the Fed is not expecting or forecasting a recession,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The U.S. Labor Department on Friday reported that employers added 130,000 new jobs in August, somewhat undershooting economists’ estimates and adding to fears of a weakening economy. Compounding demand worries, the tit-for-tat tariff war between the world’s top two economies worsened, and China moved to cut its reserve requirement.
The market also unraveled gains that were driven by a bullish U.S. petroleum inventory report Thursday which showed weekly stocks in crude and major fuels had declined nearly 10 million barrels.
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West Texas Intermediate oil for October delivery gained 22 cents to settle at $56.52 a barrel on the New York Mercantile Exchange. It was up 2.6% for the week. Gasoline’s spread to crude, also known as the gasoline crack, rose as much as 11% for the largest weekly gain since July as gasoline futures strengthened.
Brent for November rose 59 cents to settle at $61.54 a barrel on the ICE Futures Europe Exchange, ending the week up 1.8%. The global benchmark traded at a $5.11 premium to WTI for the same month.
--With assistance from Grant Smith.
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