DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate and ULSD futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Tuesday's session little unchanged. Equity markets moved lower as investors weighed the economic damage from the recent surge in U.S. coronavirus infections that is seen undermining driving demand and consumers spending.

On the session, NYMEX August West Texas Intermediate futures registered a 1-cent change to settle at $40.62, and Brent crude finished a quiet day of trading just above $43 per barrel (bbl). NYMEX RBOB August futures managed to recoup earlier losses to end Tuesday's trade with hefty gains at $1.2750 per gallon, and the NYMEX ULSD August futures settled up marginally at $1.2433 a gallon.

Traders seemed to have hit pause on the recent rally in oil and equity markets as growing uncertainty surrounding the pandemic resurgence in the world's largest economy capped expected recovery in consumer demand. With new business re-closures announced daily and traffic activity falling in the most affected areas of Texas and Florida, markets now anxiously await a weekly update on U.S. demand recovery. The American Petroleum Institute is scheduled to release its inventory report 4:30 p.m. EDT Tuesday, followed by Wednesday's release of official data from the U.S. Energy Information Administration. Market consensus calls for crude-oil stocks to have decreased by about 3.4 million barrels last week, while both gasoline and distillate fuel supplies, including fuel oil and diesel, declined by about 1 million barrels.

Even so, traffic data for the July Fourth holiday weekend might suggest those expectations are somewhat too bullish, with the mobility index across the most populous U.S. states falling to the lowest in four weeks.

Atlanta Federal Reserve President Raphael Bostic told the Financial Times on Tuesday he was seeing signs that the U.S. economy was "leveling off." "There are a couple of things that we are seeing, and some of them are troubling and might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise," Bostic said in the interview.

Underlining this trend, the European Commission downgraded its 2020 growth forecast for the bloc earlier Tuesday, forecasting a year-on-year GDP contraction of 8.7%. The outlook seemed to have worsened over the last two months irrespective of the steps that most European countries have taken to reopen their economies. The agency also trimmed its estimate for a 2021 rebound, calling for an incomplete and uneven recovery on the back of continued social-distancing measures.

"The economic impact of the lockdown is more severe than we initially expected. We continue to navigate in stormy waters and face many risks, including another major wave of infections," Valdis Dombrovskis, vice-president of the European Commission, said in a statement Tuesday.

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

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