WASHINGTON (DTN) -- Nearest delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange shifted lower in overnight trade, with the West Texas Intermediate September contract retreating from a four-months high after industry data showed a surprise build in U.S. commercial crude-oil inventories during the week ended July 17, stoking supply glut fears as demand struggles to recover to pre-pandemic levels.
"The pandemic will unfortunately get worse before it gets better ... something I don't like saying about things, but that's the way it is," said U.S. President Donald Trump during his Tuesday press briefing where he addressed the country's struggle to slow the spread of the virus. President Trump urged Americans to stay home and practice social distancing when in public, a major reversal from the Administration that prioritized reopening of the economy.
Stock futures on Wall Street edged lower in premarket trade Wednesday and the U.S. dollar fell back further to 94.960 against the basket of foreign currencies, with the euro rallying to one-year high of 1.1518 on hopes a newly-agreed upon stimulus package in European Union would trigger spending and investment around the 27-member states. The deal includes a new budget and recovery fund to rebuild EU economies affected by the coronavirus pandemic.
"It is an ambitious and comprehensive package combining the classical [budget] with an extraordinary recovery effort destined to tackle the effects of an unprecedented crisis in the best interest of the EU," the EU leaders said in a joint declaration.
In the United States, however, progress on stimulus talks looks less certain, with Democrat and Republican lawmakers having so far failed to extend supplemental unemployment benefits for nearly 30 million Americans that are still out of work due to the pandemic. Wire services reported GOP Senators favor another $1,200 emergency check for American households but want to scale back the additional $600 in unemployment benefits.
The American Petroleum Institute reported Tuesday that U.S. crude-oil stocks spiked by 7.5 million bbl during the week ended July 17, contrary to expectations for a 3.1 million bbl draw. At the key Cushing supply depot in Oklahoma, the delivery location for the New York Mercantile Exchange West Texas Intermediate futures contract, inventory gained 716,000 bbl on the week. API data also showed gasoline stockpiles tumbled more-than-expected 2.019 million bbl and distillate inventories shed 1.357 million bbl last week. The US Energy Information Administration will release its weekly inventory data later Wednesday morning at 10:30 a.m. ET.
Near 8:15 a.m. ET, NYMEX WTI September futures dropped back 70 cents to $41.26 bbl and the international crude benchmark Brent fell 59 cents to $43.73 bbl. NYMEX ULSD August futures slipped 2.04 cents to $1.2591 gallon and front-month RBOB contract traded down 1.32 cents at $1.2665 gallon.
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