WASHINGTON (DTN) -- Crude and product futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange posted solid gains Wednesday as the market looks toward partial reopening of the U.S. economy following seven weeks of coronavirus lockdown. Fuel demand showed a gradual recovery while the Federal Reserve pledged to maintain the federal funds rate near zero until the economy is back on track.
"Whatever it takes" was the message from Federal Reserve Chairman Jerome Powell during Wednesday's news conference after the central bank announced it would leave the federal funds rate unchanged between a 0% and 0.25% target range. Powell warned, however, that low interest rates cannot stop the sharp drop in economic activity that is expected in the second quarter.
The Bureau of Economic Analysis on Wednesday morning said U.S. real gross domestic product for the first quarter contracted 4.8%, halting the longest economic expansion in U.S. history. Since most coronavirus lockdowns began in the second half of March, economists now brace for a second-quarter plunge of Great Recession proportions.
"Next week's jobs report is expected to show that the unemployment rate which was at 50-year lows two months ago has surged into double digits," said Powell.
Market consensus calling for initial jobless claims to spike 3.5 million during the week ended April 25, bringing the four-week average unemployment number to 5.787 million. If realized, a total of 29.7 million Americans have filed for unemployment benefits over the past six weeks.
Meanwhile, 17 states now look to partially reopen their economies, including Texas, Florida, and Ohio, where shelter-at-home orders expire Thursday.
U.S. gasoline demand clbimbed for the third straight week, surging 549,000 barrels per day (bpd) to 5.860 bpd during the week ended April 24, while stocks posted their first weekly drawdown in nearly five weeks, down 3.7 million barrels (bbl) to 259.6 million bbl, narrowing a surplus against year ago 2.1% to 14.5%. Domestic refiners increased run rates for the first time in three weeks, up 2% to 69.6%, boosting gasoline production. Commercial crude oil stocks rose a less-than-expected 9 million bbl and Cushing supply jumped another 3.637 million bbl on the week to 81% of capacity.
NYMEX June West Texas Intermediate futures settled up $2.72 to $15.06 bbl, paring an advance to a $16.78 bbl high, with next-month delivered July contract narrowing its premium against the front-month contract to $3.92 bbl. June Brent futures on the Intercontinental Exchange settled at $22.54 bbl and July Brent settled with a $1.69 premium ahead of assuming front-month position on Friday. May ULSD futures advanced 6.37 cents to $0.6945, moving off a $0.58 18-year low on the spot continuous chart, with June ULSD futures closing with an 8.25 cents premium. NYMEX May RBOB futures surged 6 cents to $0.7272 gallon, with the June contact narrowing its premium to 2.73 cents ahead of the May contract's expiration Thursday afternoon.
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