WASHINGTON (DTN) -- Heading into the weekend, oil and product futures on New York Mercantile Exchange and Brent crude on Intercontinental Exchange moved lower to finish a volatile week with hefty losses. A rising number of coronavirus infections in Southern and Western states triggered the first business reclosures since the pandemic began three months ago, fueling concerns over the additional economic damage re-closings could cause.
On the week, U.S. benchmark West Texas Intermediate shed $1.69 to $38.49 per barrel (bbl), and Brent crude declined $1.49 to finish the week just above $42 per bbl. NYMEX ULSD contract for July delivery dropped back 8.51 cents or 5% on the week, while down 1.93 cents on Friday to $1.1363 per gallon. NYMEX RBOB July futures retreated 4.09 cents on Friday to a better-than-three-week low $1.1533 gallon, hammered by the latest downturn in major centers for U.S. gasoline consumption.
Governors of Texas and Florida, Greg Abbott (R) and Ron DeSantis (R), announced Friday the re-closure of all bars and reduced restaurant capacity for their states hours after both pledged not to close businesses in the aftermath of a massive new spike of COVID-19 infections. Both states registered record-high daily increases in new coronavirus cases on Friday, with the number of filled intensive care unit beds nearing maximum capacity in several counties in the two states.
The White House coronavirus task force, led by Vice President Mike Pence, said Friday the Trump administration fully supports the measures governors took Friday.
Consumer sentiment across Sun Belt states soured in recent weeks, according to the University of Michigan Consumer Sentiment Survey released Friday morning, with consumers seeing a worsening economic outlook as the deadly pathogen spreads. In comparison, residents in Northeastern regions recorded a record-high advance of 19.7 points in their sentiment as the later and more gradual reopening seemed to have so far produced a negligible increase in infections.
Regardless of the survey results, spiking cases of COVID-19 are the likely outcome for the states that have reopened, raising questions over the future direction of the economic recovery. Coronavirus pandemic remains the key variable for oil prices, with an "out-of-control" outbreak likely to lead to a major correction by the oil complex.
On the supply side, Baker Hughes reported a one rig decline in the U.S. oil rig count for the week ended June 26 to 188 that, while an 11-year low, signals the 15-week string of rig deactivations in the United States is about to end.
The U.S. oil rig count is down 605 from year ago, with 476 of those rigs pulled from service in the second quarter. U.S. production bounced back 500,000 barrels per day (bpd) during the most recent week to 11 million bpd, while most of that return offshore production following shut-ins during the prior week amid Tropical Storm Cristobal.
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