WTI Futures Unchanged

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange ended mixed Thursday, with West Texas Intermediate again pressured under $20 barrel (bbl) after bearish demand forecasts and extreme builds in U.S. crude and product stocks added to growing evidence the global COVID-19 pandemic is decimating U.S. manufacturing and service sectors.

NYMEX May West Texas Intermediate futures settled unchanged at $19.87 bbl and ICE June Brent finished fractionally higher at $27.82 bbl. May RBOB futures dipped 1.53 cents to $0.7051 gallon and NYMEX ULSD May futures gained 3.25 cents to $0.9463 gallon, reversing off a fresh 51-month spot low at $0.9026 gallon.

Oil futures briefly attempted to break higher Thursday, but the WTI contract turned lower after initial jobless claims in the United States were reported at 5.245 million last week, bringing the total number of unemployed to over 20 million. Although data showed a slowdown in initial claims filed compared to last three weeks, the numbers underline the depth of coronavirus-led recession in the world's largest economy.

The new jobless claims followed a string of dismal economic figures in the United States this week, starting with an 8.7% plunge in March retail sales and 5% dive in manufacturing activity. The downturn in the U.S. economy is seen accelerating in April, the first full month of a countrywide lockdown.

New York Federal Reserve Governor and voting member John Williams warned this week the full scale of the economic consequences due to the countrywide lockdown is still unknown, anticipating more economic pain in the coming months.

Against this backdrop, U.S. President Donald Trump plans to announce later Thursday guidelines on reopening parts of the U.S. economy, which could see a phased approach in states ending stay-at-home orders.

The Organization of the Petroleum Exporting Countries earlier Thursday revised its 2020 global oil demand forecast down 6.9 million barrels per day (bpd), projecting an annualized drop of 6.8 million bpd for total consumption at 92.93 million bpd. OPEC projects the contraction in the second quarter at around 12 million bpd, with April the worst month with demand contracting 20 million bpd. OPEC economists expect 60% of the loss to come from transportation fuels, primarily gasoline and jet fuel.

"Considering latest developments, and the large uncertainties going forward, downward risks remain significant, suggesting possibility of further adjustments, especially in the 2Q, should new data and further developments warrant revisions," said OPEC.

OPEC sees demand for its crude in 2020 averaging 24.5 million bpd, down 5.4 million bpd from 2019, adding the outlook remains heavily subject to uncertainty surrounding current market conditions.

OPEC revised U.S. liquids output for this year down 1.05 million bpd from its March outlook to 18.25 million bpd.

"After many years, the U.S. is no longer forecast to be the driver for non-OPEC supply. A preliminary indicator of tight oil production growth slowdown is the decline in the active oil rig count in most shale regions, including the Permian Basin," said OPEC.

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


Liubov Georges