WASHINGTON (DTN) -- West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange traded on either side of unchanged for most of Thursday's session, as investors gauged a two-week delay for a meeting between Organization of the Petroleum Exporting Countries and Russia-led partners, with the delay adding uncertainty to whether the producers would agree to extend a production agreement reducing output by 9.7 million barrels per day (bpd) into the second half of 2020.
Wire services reported OPEC+ set a new date for their virtual meeting from today to June 17-18, with Russia and Saudi Arabia pressing laggard members to meet their pledged quotas ahead of the gathering. Iraq, Angola, Nigeria, and Kazakhstan all underdelivered on their reductions under the joint agreement, with most of them not even meeting a 50% threshold.
Russia and Saudi Arabia have agreed to extend the accord for another month if all members share the burden of the deep cuts they pledged. Markets remain cautiously optimistic that some arm twisting could do the trick and make laggards cut their production. Although, the discourse itself might suggest producers are less willing to manage the volatile markets than they say. Regardless of the thinking, crude futures ended the session little changed with investors searching for new clues, taking a breather in the higher trending market.
On the session, NYMEX WTI July futures gained $0.12 to $37.41 barrel (bbl) and Brent crude for August delivery finished the session with a modest gain at $39.99 bbl. NYMEX RBOB July futures strengthened 2.97 cents to near a 12-week high $1.1490 gallon and NYMEX ULSD futures ended the session little changed at $1.0741 gallon.
ULSD and RBOB futures were partially lent support by encouraging jobs data released Wednesday and Thursday, indicating the economy is losing fewer jobs than previously thought. Private payroll provider, ADP showed 2.76 million jobs were lost in May vs. calls for 8.66 million, surprising the market to the upside. On Friday, the Labor Department is expected to report 7.725 million net job losses in May compared with 20.5 million in the prior month and the unemployment rate increasing at a much slower pace of 5% to 19% after jumping to 14.5% in April. Put simply, the U.S. labor market is beginning to show signs of improvement and oil investors are taking note.
Motor gasoline demand in the United States jumped nearly 300,000 bpd or over 4% to 7.549 million bpd, a 10-week high, during the last week of May, although 20% lower than the same week in 2019. In contrast, demand for distillate fuels, mostly used in manufacturing, mining and farming, continue to show signs of weakness as the economy reemerges from lockdown. EIA data reported nationwide distillate stockpiles jumped 9.9 million bpd in the most recent week to a nearly 10-year high 174.3 million bbl. Implied demand for distillates eroded further, tumbling 548,000 bpd or 16.8% in the week profiled to 2.718 million bpd, down 20% from the same week in 2019.
Separately, Cristabol, the third named storm of the 2020 Atlantic Basin hurricane season is not seen affecting offshore drilling operations in Gulf of Mexico, weakening to a tropical depression this afternoon, according to DTN WeatherOps Forecaster. Cristabol is forecast to make landfall in Louisiana late Sunday (6/7). The Gulf of Mexico accounts for 19% of U.S. crude output.
Liubov Georges can be reached at email@example.com
© (c) Copyright 2020 DTN, LLC. All rights reserved.