<a href="https://www.thenationalnews.com/business/energy/2023/02/02/oil-prices-climb-after-falling-3-on-large-us-crude-build-and-interest-rate-concerns/" target="_blank">Oil prices</a> settled lower on Friday, posting a second weekly loss and its lowest in three weeks, as a volatile session reflected investor concerns that interest rates would continue to rise following a <a href="https://www.thenationalnews.com/business/economy/2023/02/03/us-jobs-report-smashes-expectations/" target="_blank">strong US jobs report</a>. Investors also focused on the embargo on Russian refined products agreed upon by the EU, G7 and Australia on Friday, as well as signs that an economic recovery is underway in top crude importer China. Brent, the benchmark for two thirds of the world’s oil, fell 2.71 per cent, to $79.94 a barrel at the close of trading on Friday. West Texas Intermediate, the gauge that tracks US crude, settled 3.28 per cent lower at $73.39 a barrel. Brent was 7.8 per cent lower and WTI 7.9 per cent weaker over the previous week. "Oil prices initially headed higher after an impressive jobs report was followed by a massive rebound with the Institute for Supply Management (ISM) services reading. Recession doubts quickly vanished as this economy was showing signs it will not break," said Edward Moya, a senior market analyst at Oanda. The ISM reading showed the non-manufacturing purchasing manager's index increased to 55.2 last month from 49.2 in December, well above the 50 level that separates expansion from contraction. "The crude price rally ... did not last as some traders thought a strong labour market will complicate what the Fed does and keep the risk of much more aggressive tightening on the table," Mr Moya said. "The reversal with oil prices led to the reversal over what happened with stocks. The short-term crude demand outlook should be looking a bit healthier, so this weakness might not last much longer. Brent crude does not belong below the $80 level as the global economic outlook looks like it will be ok for the rest of the quarter." US employers added far more jobs than forecast last month, underlining the resilience of the labour market despite aggressive actions from the <a href="http://thenationalnews.com/tags/federal-reserve">Federal Reserve</a> to cool inflation. Total non-farm payrolls added 517,000 jobs in January, data from the <a href="https://www.bls.gov/news.release/empsit.nr0.htm">Labour Department</a> showed, far exceeding a Reuters estimation of 185,000. It also surpassed the number of jobs added in January 2022 by 13,000. Meanwhile, the EU, G7 and Australia on Friday said they agreed on price caps for Russian petroleum exports, aimed limiting the ability of Russian President Vladimir Putin to fund his military offensive in Ukraine. The caps include $100 per barrel on expensive fuel like diesel and $45 on other products such as fuel oil, officials said. It was an "important agreement as part of the continued response by EU and partners to the Russian war of aggression against Ukraine", said Sweden, which holds the rotating EU presidency. Optimism over <a href="https://www.thenationalnews.com/business/energy/2023/01/18/global-oil-demand-will-surge-to-record-this-year-as-china-reopens-iea-says/" target="_blank">China’s reopening</a> had pushed oil prices close to $90 a barrel last month. However, rising economic uncertainty and concerns of weakening demand have since weighed on futures. The US Dollar Index, a measure of the value of the greenback against a weighted basket of major currencies, was up 0.12 per cent at 101.87. A stronger dollar makes oil more expensive for holders of other currencies. Central banks around the world have raised their benchmark borrowing rates after the US Federal Reserve raised<a href="https://www.thenationalnews.com/business/economy/2023/02/02/gulf-central-banks-raise-interest-rates-after-fed-quarter-point-increase/" target="_blank"> interest rates</a> by 25 basis points in its first policy decision of the year on Wednesday. This was the eighth rate increase and<b> </b>the smallest in the federal funds target rate range since the US central bank began to raise rates last year in March. It also pushes interest rates in the US to their highest point since the 2008 financial crisis. The Fed further indicated that more increases were to come. <a href="https://www.thenationalnews.com/world/uk-news/2023/02/02/uk-interest-rates-raised-by-05-to-4/" target="_blank">The Bank of England </a>has also raised interest rates by 0.5 per cent to 4 per cent as it looks to rein in high inflation in the UK. UK interest rates are now at their highest levels since late 2008 and a BoE statement warned that further tightening of rates was possible. The European Central Bank also increased interest rates by 0.5 per cent. In a surprise move, the Central Bank of Egypt kept interest rates steady at its first meeting of the year on Thursday, despite soaring inflation. The bank’s monetary policy committee kept its overnight deposit rate, overnight lending rate and the rate of the main operation at 16.25 per cent, 17.25 per cent and 16.75 per cent, respectively. Last week, the IMF marginally raised its growth forecast for 2023 on easing inflation, China's reopening and resilience in the global economy. It raised its global economic growth estimate for this year to 2.9 per cent from a previous forecast of 2.7 per cent and said that more work needed to be done for full recovery to take place. On Wednesday, the Opec+ alliance of 23 oil-producing countries agreed to roll over its <a href="https://www.thenationalnews.com/business/energy/2023/02/01/opec-agrees-to-stick-to-oil-output-targets-amid-improving-china-outlook/" target="_blank">existing oil output cuts</a> of 2 million barrels per day amid an improving fuel demand outlook in China. Crude prices could rise next week after an EU embargo on Russian oil products comes into effect on February 5. “We believe the market is underappreciating the coming Russian oil products embargo — ultimately what end-consumers are actually exposed to,” said Ehsan Khoman, director, head of research responsible for commodities, environmental, social and governance, and emerging markets at MUFG. “When accounting for shipping and pricing considerations, the oil product ban will likely have larger reverberations on global markets than the December crude oil ban.” Diesel is the backbone of global economic activity and markets were already in a deficit before Russia’s invasion of Ukraine began in February last year. This was due to the closure of 3.5 million bpd of refinery distillation capacity since the start of the Covid-19 pandemic, resulting in a net decline of 1 million bpd, the International Energy Agency said in a November report.