WASHINGTON (DTN) -- Except for RBOB, oil futures on New York Mercantile Exchange and Brent crude on Intercontinental Exchange turned lower in early trade Wednesday after briefly posting gains on breaking news the U.S. Senate reached an historic $2 trillion relief package to help the domestic economy from a withering coronavirus caused slowdown, with sentiment turning sour as more countries go into full lockdown to halt the spreading pandemic.
U.S. equities only briefly looked to rally for the second consecutive session Wednesday on what could have been first back-to-back gains since early February. Dow Jones Industrials surged over 2,200 points on Tuesday, the best daily gain since 1933. Stocks around the world were mixed as lawmakers on Capitol Hill inched closer to a monumental $2 trillion stimulus package for the U.S. economy intended to cushion the blow from an expected coronavirus-led recession. After reaching the agreement, U.S. Senate Majority Leader Mitch McConnell said the unprecedented amount of cash -- a sum many times larger than the U.S. Defense budget -- would be a "wartime level of investment into our nation."
If approved by both Houses of Congress later Wednesday, and then signed by President Donald Trump, the bill will provide around $500 billion in direct corporate loans and a further $500 billion in immediate cash to millions of American taxpayers. The historic agreement between Senate Republican and Democrats came after days of bipartisan bickering and gave only a short-lived boost to U.S. equities and the oil complex.
At the same time, coronavirus pandemic that has sickened over 250,000 people and killed nearly 20,000 around the world, continue to wreak havoc on the global economy, shutting down countries critical to the global supply chain. India declared Tuesday a nationwide lockdown for the duration of 21 days in what has become be the largest lockdown in human history. Italy once again saw a jump in its daily death toll following two straight days of declines, the nation's health authorities said Wednesday. In the United States, coronavirus-related death toll has also been rising exponentially to top 800 early Wednesday after eclipsing 600 on Tuesday.
Domestically, private survey showed U.S. purchasing manufacturing index plunged 9.1 points in March to a 40.5 reading, with declines largely attributed to asymmetrical slowdown across services as restaurants and bars began shutting their doors this month. That follows a slew of bearish data out of eurozone, detailing a steep contraction in Germany and France's service sectors that usually outperform manufacturing.
Separately, The American Petroleum Institute reported Tuesday U.S. commercial crude oil supplies declined a second week during the week ended March 20 while also detailing further drawdowns in gasoline and distillate inventories. API reported commercial crude oil supplies were drawn down 1.25 million per barrel (bbl), contrary to calls for a 4 million bbl build, while at the Cushing, Oklahoma-hub crude stocks rose 1.1 million bbl last week. Gasoline supply fell 2.6 million bbl in the week profiled, more than the expected 1.5 million bbl increase, and distillate stockpiles decreased 1.9 million bbl versus an estimated 1 million bbl draw.
Markets now await official supply data from US Energy Information Administration due out at 10:30 a.m. ET.
In early trading, NYMEX May West Texas Intermediate futures were down $0.44 to $23.55 bbl and ICE May Brent slumped $0.90 lower to $26.26 bbl. NYMEX April ULSD futures edged lower 0.23 cents to $1.0780 gallon and front-month NYMEX RBOB contract gained 1.97 cents, having traded at a 21-year low on Monday.
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