DTN Oil

WASHINGTON (DTN) -- Following a choppy start to the session, oil and product futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange turned sharply lower in afternoon trade Thursday in sync with tumbling U.S. equities as a record spike in domestic coronavirus infections resulted in higher virus-related deaths across southwestern states, further undermining confidence in the ongoing economic recovery.

The death rate is ticking upwards in several states that have recently seen a spike in coronavirus infections with calls growing louder for local officials to re-introduce measures to contain the spread. Death rate is often seen as a lagging indicator of an outbreak since it can take several weeks to die after becoming sick. Florida reported Wednesday its highest death toll for the state at 120 fatalities with the trajectory of the virus suggesting the curve is nowhere near its peak.

U.S. coronavirus infections climbed by 60,000 new cases on Wednesday, according to Centers of Disease Control, the highest single day increase of any country since the outbreak first began in early January.

Markets finally reacted. U.S. equities slumped in afternoon trading with the Dow Jones Industrial Index falling 300 points and S&P 500 down 0.14%. The U.S. dollar sagged against the basket of global currencies with China's yen trading at a 4-month high against the greenback while the euro rose to a 1-month high in European trading.

Thursday's declines came despite better-than-expected U.S. jobless claims for the week ended July 4 at 1.314 million vs. 1.367 million expected. The Bureau of Labor Statics showed initial jobless claims have now declined for the 12th straight week and the unemployment rate dropped to 12.4% from a record-high 14.7% at mid-April. Even so, nearly 50 million Americans have filed for unemployment benefits since the pandemic first erupted in the U.S. four months ago, underlining the economic damage caused by the ongoing health crisis.

Atlanta Federal Reserve Bank President Raphael Bostic said Thursday the U.S. economy is unlikely to return to pre-virus growth levels this or next year. His comments are mostly in line with Federal Reserve projections to keep interest rates near zero through 2022.

At settlement, NYMEX West Texas Intermediate August futures dropped $1.28 or 3.5% to $39.62 bbl and international benchmark September Brent declined about $1.00 to $42.35 bbl. NYMEX ULSD futures fell 1.05 cents to settle at $1.2239 gallon and front-month RBOB futures retreated more than 3% from the 2-week high settlement the prior session, sliding 4.04 cents to $1.2505 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com

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