WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued lower in overnight trade under pressure from a firmer U.S. dollar while the front-month RBOB contract fell more than 2% after California announced statewide re-closures of indoor business activity, further raising concerns over the pace of economic recovery as U.S. coronavirus infections surged over 3.3 million.
U.S. equities edged higher and the greenback advanced against the basket of foreign currencies as investors awaited second-quarter earnings from JP Morgan Chase, Citi Group and Wells Fargo set for release before the opening bell. Crude futures retraced some overnight losses, suggesting oil is looking for direction in broader markets with the pace of the U.S. economic recovery clouded with uncertainty. California Governor Gavin Newsom announced Monday the immediate reclosure of all indoor activities across the state, including dining, bars and gyms. Also Monday, some schools in Los Angeles and San Diego said they will offer online classes only this fall but keeping both students and their parents in limbo regarding when and how restart of in-person learning could begin.
There are growing signs the U.S. economic recovery is flatlining amid the mounting number of coronavirus infections, hospitalizations and fatalities across parts of the country. Mobility index data show traffic in the United States has hit a ceiling in the most recent weeks, with notable declines occurring in new COVID-19 hotspots, correlating closely with the surging number of infections. In contrast, countries part of the European Union recorded steady gains in traffic congestion as infection spread continued lower.
Preliminary data from GasBuddy for July 4th weekend shows U.S. gasoline consumption was down nearly 15% compared to the previous week's level, indicating some drivers opted to stay off the roads during the long holiday weekend. The Energy Information Administration reported four-week average demand for motor gasoline in the period ended July 3 was 12.5% below the corresponding four-week period last year.
Investors are also waiting for the key policy meeting among members of Organization of the Petroleum Exporting Countries and Russia-led allies set to begin Wednesday, where producers are expected to lift supply cuts by 2 million barrels per day (bpd) beginning Aug. 1. Last month, OPEC+ extended their 9.7 million curbs through July as global demand was slowly picking up pace across major economies.
"The oil market is getting closer to balance ... The gradual reopening of the economies and societies around the world has provided a much-needed resurgence in demand," said OPEC's Secretary General Mohammad Barkindo on Monday.
In early trading, West Texas Intermediate August futures were down $0.33 to $39.78 per barrel (bbl) and international benchmark Brent crude declined $0.24 to $42.48 bbl. NYMEX ULSD August futures fell 0.43 cents to $1.2192 gallon and front-month RBOB futures eroded further to one-week low $1.2454 a gallon.
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