DTN Oil

WASHINGTON (DTN) -- Nearest delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded cautiously lower ahead of Tuesday evening's first of three pre-election U.S. presidential debates, while market participants assessed a $2.2 trillion coronavirus relief proposal unveiled by House Democrats Monday night.

Near 7:30 a.m. ET, November West Texas Intermediate futures slipped 27 cents to trade at $40.32 per barrel (bbl), with November Brent futures on ICE falling 22 cents to $42.21 bbl ahead of expiration on Wednesday. The December Brent contract held a $0.40 premium to the expiring contract. NYMEX October ULSD futures traded little changed from Monday's settle at $1.1392 gallon ahead of contract expiration Wednesday afternoon, with the prompt spread at a 0.44 cents contango. October RBOB futures were down 0.87 cents to near $1.2379 gallon after gaining more than 3 cents session prior, with the November contract holding a 3.38 cents discount to expiring contract.

U.S. dollar index continued its slide, trading at 94.085 against a basket of foreign currencies as investors await the release of U.S. consumer confidence reading for September due out 10:00 a.m. ET, with consensus calling for a modest improvement to 88.8.

Oil futures drifted lower amid ongoing concerns over sluggish demand recovery in two major demand centers, the United States and European Union, with the downside limited by signs of progress on a coronavirus relief package in Washington, D.C. House Speaker Nancy Pelosi unveiled Monday a newly-crafted $2.2 trillion relief bill, which she said includes "new funding needed to avert catastrophe for schools, small businesses, restaurants, performance spaces, airline workers and others."

The prospect of the package passing ahead of the presidential election Nov. 3 fueled modest bullish momentum across equity markets on Monday, but overall sentiment remains uncertain amid rising levels of coronavirus infections and uneven economic recovery domestically.

U.S. fuel demand remains far below pre-crisis level, with four-week average gasoline implied demand nearly 9% below a year ago at 8.542 million barrels per day (bpd), according to the most recent data from the U.S. Energy Information Administration. Globally, commercial oil inventories held by the 37-country bloc Organization for Economic Cooperation and Development are forecast to remain above the five-year average through the second quarter of 2021, according to the latest projection from the Organization of the Petroleum Exporting Countries.

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

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