DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange nearby delivery oil futures and Brent crude on the Intercontinental Exchange settled Thursday's session shallowly mixed, with the front-month RBOB contract edging higher on signs the U.S. labor market might be strengthening after initial jobless claims dropped to their lowest since the pandemic began during the week ended Aug. 1, spurring hopes for a robust fuel demand growth in the second half of the year.

Following two consecutive weeks of back-to-back increases, initial unemployment claims in the United States eased to 1.189 million last week, a decrease of 249,000 from the previous week's revised levels. First-time jobless applications declined across nearly all states, suggesting the labor market might be slowly rebounding as new cases of coronavirus infections tailed off sharply last week. Continued unemployment claims, the number of people receiving unemployment benefits for consecutive weeks, also decreased to a better-than-expected 16.107 million in the reviewed week.

Centers for Disease Control data, however, reported a fresh uptick in new COVID-19 cases on Wednesday, up 53,683 from Sunday's 40,000.

Traders and investors pay close attention to changes in the labor market as it correlates closely with demand for refined fuels. U.S. gasoline consumption has dropped about 200,000 barrels per day (bpd) or 2.2% to 8.617 million bpd as of Aug.1 while 4-week average gasoline demand stood at 8.656 million bpd, nearly 10% below the corresponding 4-week period last year.

Markets will now shift focus to Friday's U.S. non-farm payroll report slated for release at 8:30 a.m. EDT. Economists predict the U.S. economy added 2 million jobs last month, a sizable decrease from 4.8 million new positions created in June. Forecasts, however, have consistently underestimated the return of employment in recent months. In May, the forecast was a drop of 8 million jobs versus actual payroll additions of 2.699 million, in June the forecast was increase 3 million versus the addition of 4.8 million arrived.

Aside from the labor market, economic activity in the U.S. service and manufacturing sectors expanded at a robust pace in July, with Institute for Supply Management's PMI indexes reported at well above 50%. While headline ISM PMIs were great news for recovering economy, the employment components remained under 50%, still pointing to contraction.

Separately, Saudi Arabia's state producer Aramco cut the official selling prices for its crude to Asia and Europe, while leaving them unchanged for the United States. According to a document obtained by Reuters, Aramco set the official selling price for its Arab light crude to Asia at plus $0.90 a barrel versus Oman/Dubai average, down $0.30 from August. The OSP cuts were in line with market expectations.

On a session, the front-month West Texas Intermediate contract settled 24 cents lower at $41.95 barrel (bbl) and Brent crude slipped 8cts to settle above $45 bbl. NYMEX ULSD September futures fell 1.32 cents to $1.2499 gallon and front-month RBOB futures added 0.53 cents to $1.2281 gallon.

Liubov Georges can be reached at liubov.georges@dtn

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