ANZ attributes the drop in oil prices to a cooling US jobs market and the fastest contraction in factory activity in nine months. These factors are raising concerns about weaker demand for crude oil.
There are media reports that OPEC+ has agreed to increase oil production by 547,000 barrels a day in September, which may also be affecting oil prices. The Wall Street Journal cites ANZ Research analysts on the price decline.
Trump Denies Jobs Market Data
Former President Trump claims that the cooling US jobs market data is manipulated and has dismissed the official responsible for the statistics. He plans to appoint a new head of the Bureau of Labor Statistics within a few days.
There is speculation about whether the market will trust any revised jobs numbers that result from this appointment. Meanwhile, oil prices have shown a gap lower, but there is no continuation of the trend, suggesting the gap may close soon.
We are seeing oil prices fall today due to concerns about weakening demand in the United States. A sharply cooling jobs market and the slowest factory output we’ve seen in nine months are pointing toward a potential slowdown. The recent Non-Farm Payrolls report for July 2025 showed a gain of only 85,000 jobs, falling far short of the 190,000 that was widely expected.
This economic weakness is a major red flag for oil demand. The latest ISM Manufacturing PMI reading of 47.2, released last week, confirms the contraction in the factory sector for the third consecutive month. For traders, this reinforces a bearish outlook, suggesting that selling rallies in crude oil futures could be a sound strategy in the near term.
Oil Price Volatility Expected
On the supply side, the news that OPEC+ will increase output by 547,000 barrels a day in September is adding to the downward pressure. However, we believe this increase was largely anticipated by the market and is already factored into the current price. When we look back at a similar, well-telegraphed production hike in late 2024, the price dip was short-lived.
The major uncertainty for the coming weeks stems from the political situation surrounding the U.S. jobs data. The administration’s plan to appoint a new head to the Bureau of Labor Statistics introduces doubt about the future reliability of economic reports. This could lead to a period where markets react less to the official numbers and more to perceived reality.
This environment suggests we could be entering a period of heightened volatility. While the real economic data points to lower oil prices, the potential for politically influenced “stronger” jobs reports in the future could cause sharp, unpredictable rallies. Looking at historical precedent, we saw increased market chop in the months following the contentious Fed leadership changes back in 2023.
Given these conflicting signals, traders might consider strategies that benefit from price swings rather than a specific direction. Buying options straddles on oil ETFs, which profit from a significant move either up or down, could be a way to trade the expected increase in volatility. This approach hedges against the uncertainty of whether real economic weakness or manipulated data will win the day.
