USA Labor Market Report Underpins Energy Demand

In a market update sent to Rigzone late Wednesday, Rystad Energy outlined that the January U.S. labor market report “surprise[d]… to the upside, underpinning energy demand”.

Rystad noted in the report that the latest U.S. jobs data “shows promise, with the unemployment rate falling by 4.3 percent, pointing to market stability”.

“Non-farm payrolls increased by 130,000 jobs in January, while the rise for December was downwardly revised to 48,000,” it pointed out, adding that the unemployment rate in December was 4.4 percent.

“The latest data compares with consensus expectations of job gains of around 70,000 and the unemployment rate holding steady at 4.4 percent,” Rystad said.

In the update, Rystad Energy Chief Economist Claudio Galimberti noted that payroll growth exceeded expectations and that unemployment edged lower.

“Following a series of weaker private indicators, the data suggests stabilization rather than strong acceleration,” Galimberti said.

“Markets that had positioned for a rapid easing cycle responded by repricing yields higher and scaling back expectations for near-term rate cuts,” he added.

“For energy markets, the implications are moderately supportive. A resilient labor market underpins demand for transport fuels, petrochemicals and power generation, reducing downside risks to U.S. consumption at a time when macro sentiment had turned cautious,” he continued.

“While the U.S. is not the primary driver of incremental global oil demand, labor market stability reinforces the view that the demand picture is firming up,” he went on to state.

Galimberti noted in the update that “revisions to prior data confirm that the cycle is mature, not accelerating”.

“Still, in a market already balancing OPEC+ supply management against geopolitical risk, a firmer U.S. macro signal marginally strengthens the demand outlook,” he said.

“The result is a modestly constructive backdrop for oil prices in the near term, without materially shifting the fundamentals,” Galimberti concluded.

In a Skandinaviska Enskilda Banken AB (SEB) report sent to Rigzone on Thursday, SEB Commodities Analyst Ole R. Hvalbye highlighted that Brent crude “continues to hover around the $70 per barrel mark, currently trading slightly below yesterday’s intraday high of $70.7 per barrel”.

“The late session decline yesterday was largely triggered by Trump’s meeting with PM Netanyahu, where he signaled a preference for a negotiated solution with Iran rather than immediate escalation,” Hvalbye said in the report.

“Nothing concrete was agreed, but that was enough for the market to trim some of the geopolitical risk premium,” he added.

Hvalbye went on to state in the report that the market “is now naturally waiting for the next round of U.S.-Iran dialogue”.

“Both sides are still publicly firm on their own outcome, but the fact that talks remain alive is enough to prevent any further spike prices here and now,” he said.

In its latest short term energy outlook (STEO), which was released on February 10, the U.S. Energy Information Administration (EIA) projected that the average Brent spot price will drop in 2026.

According to this STEO, the EIA sees the Brent spot price coming in at $57.69 per barrel this year. The Brent spot price averaged $69.04 per barrel in 2025, the STEO showed.

A quarterly breakdown included in the EIA’s latest STEO showed that the organization expects the Brent spot price to come in at $64.44 per barrel in the first quarter of this year, $57.32 per barrel in the second quarter, $55.35 per barrel in the third quarter, $54.00 per barrel in the fourth quarter.

In the STEO, the EIA highlighted that the Brent crude oil spot price averaged $67 per barrel in January, which it pointed out was $4 per barrel higher than the average in December. The EIA noted that daily Brent crude oil prices increased from an average of $62 per barrel on January 2 to $72 per barrel on January 30.

To contact the author, email andreas.exarheas@rigzone.com