DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Monday's session higher, although all petroleum contracts pared earlier advances after a Federal Reserve survey revealed tighter credit conditions for U.S. businesses and households over the past three months, lifting the U.S. dollar index against a basket of major currencies.

The Senior Loan Officer Opinion Survey on Bank Lending Practices, or SLOOS, published Monday afternoon showed 48.5% of large banks and 36.7% of smaller lending institutions reported they "tightened credit somewhat," although a majority of banks still see the availability of credit largely unchanged from the fourth quarter 2022.

While no large banks reported beefed up lending standards, 3.2% of all banks responded they "tightened credit considerably" over the past three months, which follows the collapse of Silicon Valley Bank on March 10.

"Regarding ... reasons for changing standards on all loan categories in the first quarter, banks cited a less favorable or more uncertain economic outlook, reduced tolerance for risk, deterioration in collateral values, and concerns about banks' funding costs and liquidity positions," according to comments from the SLOOS survey.

The survey suggests that the recent turmoil in the banking sector has been somewhat contained, having a limited impact on credit availability that might have contributed to a stronger economy at the start of the second quarter.

Friday's employment report revealed U.S. economy added 253,000 new jobs in April as the unemployment rate fell for the second straight month to a 3.4% 54-year low. Some of the largest employment gains were in the sectors of education and health services, professional and business services, along with leisure and hospitality. The ISM services index released last week revealed the services economy remained in expansion for the fourth straight month in April, with business activity growing at a slightly faster pace compared to the prior months.

"Fourteen industries reported growth in April. The Services PMI, by being above 50% for a fourth month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector," said Timothy Nieves, chair of the Institute for Supply Management Services Business Survey Committee.

Looking deeper in Friday's employment report, even the manufacturing sector, which has hit a recession from the rotation of consumer demand toward services, produced 11,000 new jobs.

The strength of the labor market coupled with still-solid consumer spending lifted the Atlanta Federal Reserve Bank's GDPNow running estimate of U.S. Gross Domestic Product growth to 2.7% for the second quarter, up from 1.8% seen on May 1.

As fears over imminent recession fade, oil traders raised bets on more robust U.S. fuel demand this summer, pushing oil futures up more than 2% on the session.

After reaching a $73.69-per-barrel (bbl) four-day high intraday, NYMEX West Texas Intermediate June futures settled up $1.82 at $73.16 per bbl. ICE Brent July futures climbed $1.71 bbl to $77.01 bbl. NYMEX RBOB June futures jumped $0.0826 for a $2.4616-per-gallon settlement, and the front-month ULSD contract advanced $0.0630 to $2.3777 per gallon. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, strengthened 0.156 points to 101.155.

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