DTN Oil

WASHINGTON (DTN) -- In sync with tumbling equities, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange eroded further on Thursday following an unexpected jump in U.S. unemployment claims for the first time in 15 weeks, stoking fears that the resurgent virus in parts of the country has derailed the nascent economic recovery.

The U.S. Department of Labor today reported initial jobless claims of 1.416 million last week, an increase of more than 100,000 from the previous week's revised levels while analysts forecast a reading of 1.3 million. The increase in weekly claims coincided with rising coronavirus cases across several of the U.S. states, prompting local authorities to shutter businesses once again to slow the spread. This week, the Trump Administration seemed to have reversed course from aggressive re-openings to public health concerns, calling for Americans to wear masks in public and respect social-distancing guidelines.

Following the downbeat jobs data, stocks on Wall Street slumped, the U.S. dollar fell below the key support level of 95.0 against the basket of foreign currencies and gold surged to the highest level since 2011.

The U.S. crude benchmark for September delivery dropped 0.83 cents to settle just above $41 per barrel (bbl) and the international benchmark Brent crude shed about $1 to finish Thursday's session at $43.31 bbl. NYMEX ULSD August futures fell 1.66 cents to $1.2541 gallon settlement and front-month RBOB futures dropped 2.24 cents to $1.2586 gallon settlement.

High unemployment numbers weigh heavily on demand for gasoline and distillate fuels, with the latest data from Energy Information Administration showing week-on-week declines in refined products consumption. The volume of petroleum products supplied to the domestic market fell by more than 800,000 barrels per day (bpd) last week and has not increased significantly since the middle of June. Against this backdrop, refiners pulled back crude processing volumes by 140,000 bpd from the previous week to 14.2 million bpd, EIA data showed.

Also this week, U.S.-China tensions came back into spotlight once again after the Trump administration ordered the closure of Chinese Consulate in Houston, Texas, suggesting some officials could have been engaged into espionage. China has since threatened to retaliate by closing one of the U.S. diplomatic missions in Wuhan, but no action has yet been taken. The situation remains fluid.

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

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