Oil prices posted a big weekly loss after the US reported weaker-than-expected jobs data in August raising concerns about growth in the world's largest economy.
Brent, the benchmark for two thirds of the world’s oil, fell 2.24 per cent to end at $71.06 a barrel, while West Texas Intermediate, the gauge that tracks US crude, settled down 2.14 per cent to $67.67 a barrel.
For the week, Brent fell by 10 per cent, while WTI dropped about 8 per cent.
The US Labour Department data on Friday showed nonfarm payrolls increased by 142,000 in August, below the FactSet estimate of 165,000. However, the unemployment rate was down from 4.3 per cent to 4.2 per cent, in line with expectations.
Crude has also been hit by concerns about weak demand from China, the world's second-biggest consumer of crude whose economy has been slowing, and despite recent supply disruptions in Libya due to a political crisis.
These have prompted Opec+'s discussions on delaying their production increase in a bid to stabilise the market, said Li Xing Gan, a financial markets strategist at Singapore-based financial services firm Exness.
The Opec+ producers group extended voluntary oil output cuts of 2.2 million barrels a day until the end of November amid a drop in crude prices on concerns of slumping demand.
Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman will pause the scheduled increases of 180,000 bpd in October and November, Opec said in a statement on Thursday.
At the end of the two-month period, "these cuts will be gradually phased out on a monthly basis starting December 1st, 2024 ... with the flexibility to pause or reverse the adjustments as necessary", the statement said.
"The overproducing countries also reconfirmed their commitment that the entire overproduced volume will be fully compensated for by September 2025," it added.
Iraq and Kazakhstan have "overproduced since January 2024, but have strongly reaffirmed their commitment to the agreement", Opec said.
Additionally, a sharp drop in US crude and fuel inventories has influenced market sentiment. American stockpiles declined to their lowest level in a year, the US Energy Information Administration said on Thursday.
The American Petroleum Institute, on the other hand, had reported a significant 7.4 million barrel decline in US crude stocks for the week ending August 30.
"Crude oil jumped above the $70-per-barrel level on news that Opec will not relax restrictions for two more months, but couldn’t hold ground at this level," Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note on Friday.
Last month, Morgan Stanley lowered its global oil demand growth forecast for this year to 1.1 million bpd, from 1.2 million bpd, citing weakness in the Chinese economy.
The investment bank also reduced its Brent price forecast – it now expects prices to average $80 per barrel in the fourth quarter of 2024, down from its previous estimate of $85 per barrel.
