WASHINGTON (DTN) -- Nearest-delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Thursday's session lower. Futures were weighed down by tumbling equity markets and a strengthening greenback as the outlook for the U.S. economic recovery grew increasingly uncertain with over 50 million Americans having filed for unemployment benefits since the coronavirus pandemic began three months ago.
At settlement, NYMEX West Texas Intermediate August futures dropped $0.45 to $40.75 per barrel (bbl), and the international benchmark Brent crude for September delivery fell $0.42 to $43.37 per bbl settlement. NYMEX ULSD August futures declined 1.69 cents to $1.2279 per gallon, and the front-month RBOB contract plunged 3.06 cents, or 2.9%, to a two-week low of $1.2590 per gallon.
The U.S. Department of Labor Thursday morning reported initial jobless claims at 1.3 million during the week ended July 11, bringing the total number of unemployed to over 50 million in just three months. The figures were worse than analysts forecast, raising concerns of a deepening crisis in the U.S. labor market. The fillings for unemployment benefits fell just 10,000 from the previous week, the least since March on a week-to-week basis.
At the same time, retail sales for June jumped 7.5% after surging 18% in the month prior as states pushed to rapidly reopen businesses. The gains in retail sales were seen driven by federal weekly payments of an additional $600 for the unemployed and continued business reopenings through the first weeks of June. The price of swift reopenings is now evident in surging coronavirus cases across some parts of the country that have triggered business reclosures and likely to keep unemployment figures stubbornly high in coming weeks.
The number of new infections in the U.S. topped 67,000 on Wednesday, according to the Centers for Disease Control and Prevention. The resurgence has prompted large states like California and Texas to reverse or slow their reopening plans.
California and Texas are two major demand centers for U.S. gasoline, with the latest data from U.S. Energy Information Administration showing demand for motor fuel easing 118,000 barrels per day (bpd) from the previous week to 8.648 million bpd.
"Energy demand, and certainly mobility demand, will be lower even when this crisis is more or less behind us. Will it mean that it will never recover? It is probably too early to say, but it will have a permanent knock for years," said Royal Dutch Shell's chief executive Ben van Beurden. "It is most likely not going to be a v-shaped recovery."
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