DTN Oil

WASHINGTON (DTN) -- Reversing earlier losses, crude and ULSD futures on New York Mercantile Exchange and the Brent contract on Intercontinental Exchange settled Thursday's session higher and the gasoline contract sharply pared losses. Markets shrugged off a record number of new coronavirus cases in the United States following comments from government officials suggesting localized outbreaks would be contained and an ongoing economic recovery would continue.

On the session, U.S. crude benchmark advanced $0.71 or 2.5% to $38.72 per barrel (bbl), and Brent crude settled just above $41 bbl, with gains for both benchmarks accelerating post-settlement. NYMEX product futures posted mixed results on Thursday to end little changed. RBOB contract dipped 0.22 cent to $1.1942 per gallon, and ULSD futures closed the session up 0.48 cent at $1.1556 gallon.

WTI and Brent futures made quick U-turns from an overnight slump after White House Adviser Larry Kudlow reassured markets the country would not close the economy again despite numerous coronavirus outbreaks in Southwestern states. COVID-19 spiked in states including Texas, Arizona, Florida and California, pushing the total number of new infections to an all-time high 45,557 on Wednesday. Kudlow, however, admitted temporary shutdowns might be needed in certain places to curtail the pace of new infections.

On Thursday, Texas paused its phased reopening of the economy, rolling back elective surgery and banning large sports venue gatherings. However, businesses that were allowed to open under phase three on June 3, meaning nearly all businesses at 50% capacity, will be able to operate as the Lone Star brings the outbreak under control.

"The last thing we want to do as a state is go backwards and close down businesses. This temporary pause will help our state corral the spread until we can safely enter the next phase of opening our state for business," said Texas Gov. Greg Abbott.

Houston-area intensive-care units reached maximum capacity on Thursday.

On the demand side, the pandemic remains the most significant downside variable for oil prices, with the latest resurgence of the virus in several U.S. states impeding the idea of an ongoing recovery. Despite supportive comments, many of establishments will likely choose to temporarily close for the safety of their employees and customers. Apple announced Thursday it would re-close 14 stores in Florida amid the spike in cases, bringing the total tally to 32.

Traffic data shows mobility indexes in affected states of the COVID-19 hot spots dropped off the cliff in the most recent days as people retreat to the safety of their homes.

On the economic data front, weekly U.S. jobless data Thursday morning showed the number of people filing for first-time unemployment benefits fell by 60,000 to 1.480 million in the week to June 20. The data came slightly above economist estimates, but it confirms a consistent decline in new claims from March highs.

U.S. real gross domestic product decreased at an annual rate of 5% in the first quarter, according to the "third" estimate released by the Bureau of Economic Analysis Thursday morning. The reading was in sync with market expectations. International Monetary Fund downgraded its U.S. GDP forecast to a negative 8% in 2020, while warning economic growth would be close to 0% next year if the country gets hit with a large second wave of infections.

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

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