DTN Oil

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange shifted lower in early trade Thursday. The June RBOB contact shed 1% following a mixed inventory report from the Energy Information Administration showing a surprise build in domestic gasoline stockpiles and softer-than-expected fuel demand during the final week of April. Market participants await another key reading on the U.S labor market later Thursday morning.

New weekly jobless claims likely fell to a new pandemic low in the final days of April, with consensus calling for initial filings to drop by 20,000 from last week's 553,000. Unemployment claims have been trending decidedly lower in recent weeks amid a pick-up in economic activity and re--openings of large states, with initial filings holding below 600,000 for a fourth straight week through April 24, dipping to the lowest level since mid-March 2020. The Department of Labor will release its weekly report on new jobless claims at 7:30 a.m. CDT.

Markets were underwhelmed with ADP's national private payroll report Wednesday, showing 742,000 private jobs were created in April compared with expectations for 800,000 jobs. Although missing the mark, U.S. private payrolls still rose by the most in seven months in April as companies boosted production to meet a surge in demand amid massive government spending and rising COVID-19 vaccinations.

On Friday, the Labor Department will give an updated snapshot of the labor market with April's monthly nonfarm employment report. Economists expect to see nonfarm payrolls rose 995,000 during the month, but estimates stretch as high as 2.1 million.

Thursday's weakness in the oil complex follow a mixed inventory report from the EIA showing a massive 8-million-barrel (bbl) draw from commercial crude stockpiles accompanied by a surprise 740,000 bbl build in gasoline inventories while fuel demand eased from the previous week. Implied demand for distillates was down nearly 5% at 4.13 million barrels per day (bpd), even as inventories declined 2.9 million bbl to a one-year low of 136.15 million bbl. Gasoline supplied to the U.S. market, a measure for demand, softened to a six-week low 8.86 million bpd despite re--openings of large gasoline consuming states.

The massive crude draw, meanwhile, came on the back of a 62% surge in U.S. crude exports to 4.12 million bpd and a 1.5% increase in total refinery net crude input to 15.24 million bpd according to the EIA data.

In early trading, NYMEX June West Texas Intermediate contract fell 40 cents to $65.20 bbl and ICE July Brent futures shed 45 cents to trade below $69 bbl. NYMEX June RBOB declined 2.02 cents to $2.1302 gallon after trading Wednesday at $2.1824 gallon -- the highest level on the spot continuation chart since July 2018. NYMEX June ULSD futures fell back from a 16-month spot high $2.0278 gallon to trade near $1.9878 gallon.

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