Oil Higher in Overnight Trade

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange continued higher in overnight trade, lifting near-month West Texas Intermediate above $15 barrel (bbl) amid signs gasoline demand in the United States is recovering following weekly data released Wednesday, with fuel demand in China also recovering from deep losses in the first quarter, with the optimism coming as both countries begin to ease coronavirus-led restrictions on personal mobility.

Dismal readings on economic activity from eurozone capped the upside, with overnight data showing economic activity across the bloc having collapsed to its lowest on record at 13.5, suggesting gross domestic product would contract 7.5% in the second quarter, as coronavirus lockdown hammered manufacturing and service sectors alike. In Germany, the eurozone's largest economy, manufacturing index plunged to 17.1, nearly twice below a projected 32 reading. France's service sector that accounts for roughly 78% of its economic output, nosedived to 10.4 from 29.0 in the month prior.

"Jobs were cut to the greatest extent ever recorded by the survey, dropping for a second successive month. Service sector jobs were slashed at the steepest rate yet witnessed by the survey, while the drop in manufacturing payrolls was the sharpest since April 2009," according to the report announcing the data.

Eurozone's economic data comes ahead of weekly jobless claims in the United States at 8:30 a.m. ET that is expected to show another 5 million Americans filed for unemployment benefits for the first time last week that would push the five-week total over 26 million if realized.

Even through data shows historic economic damage, several countries are now looking to ease some of the lockdown restrictions in the coming weeks, boosting demand for fuel and refined products.

Oxford Institute of Energy Studies projects China's second quarter fuel demand will rebound sharply from the first quarter to nearly match the year-ago level as Beijing lifts restrictions on travel.

Demand for refined fuel, including diesel, gasoline and jet fuel, in the second quarter may rise by 2.4 million barrel per day (bpd) or 23% from the first quarter, said Michal Meidan, a director at OIES.

Moving forward, commuters may choose to avoid public transport due to lingering concerns over virus and instead opt for a private car especially in large cities.

Inventory data from U.S. Energy Information Administration showed gasoline supplied to the U.S. market inched higher for a second week through April 17, up 230,000 bpd to 5.311 million bpd last week, which compares with 5.065 million bpd in late March, early April, while inventories increased 1 million bbl versus 2.8 million bbl estimated by the market.

In early trading, NYMEX June West Texas Intermediate futures advanced $1.75 to trade near $15.53 bbl and ICE June Brent futures moved up $1.57 at $21.96 after trading at a $15.98 21-year spot low the session prior. NYMEX May RBOB futures surged 6.7 cents to near $0.7054 after gaining over 28% in Wednesday's trade. NYMEX May ULSD futures were higher 3.94 cents to near $0.7705 gallon, reversing off an 18-year spot low at $0.6725 gallon.

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

(BAS)

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