DTN Oil

WASHINGTON (DTN) -- Heading into early trade Thursday, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved mixed as weakening U.S. dollar and potential breakthrough on the fifth coronavirus aid package in the United States countered rising US-China tensions in the aftermath of consulate closure in Houston, Texas.

Near 7:30 a.m. ET, the U.S. crude benchmark for September delivery traded little changed at $41.80 per barrel (bbl) and the international Brent contract was down 0.12 cents to near $44.17 bbl. NYMEX ULSD August futures edged up 0.37 cents to $1.2744 gallon and front-month RBOB futures traded unchanged at $1.2822 gallon.

U.S.-China tensions are back in focus this week after the Trump administration closed the Chinese Consulate in Houston, citing potential espionage in Texas. Houston has many sensitive targets, which include medical research laboratories and massive energy and petrochemical infrastructure. Markets are now waiting for likely retaliation from Beijing, with Chinese officials indicating they will shut down the U.S. diplomatic mission in Wuhan. The situation remains fluid.

Markets are also watching closely ongoing talks on Capitol Hill over a new round on U.S. stimulus. The Wall Street Journal reported Senate Republicans came to an agreement with the Trump administration on supplemental unemployment benefits for nearly 30 million Americans through December. “We've now had three days of meetings and we're completely on the same page,” Mr. Mnuchin said.

The package is estimated at $1 trillion and includes $16 billion for testing and more than $100 billion funding for school. It wasn't immediately known if a payroll-tax cut would be included in the GOP plan.

Also Thursday, U.S. unemployment claims are forecast to show the end to a 15-week stretch of consecutive declines that started back in late March, pointing to a deepening crisis in domestic labor market. The Labor Department is expected to report this morning the number of first-time jobless claims held at 1.3 million during the week ended July 18, bringing the total tally to 52.58 million. The U.S. dollar continued lower, trading at a 4-1/2 month low 94.835 cent in early index trade and lifting West Texas Intermediate futures in overnight trade.

The U.S. crude benchmark came under selling pressure on Wednesday after the Energy Information Administration reported domestic crude-oil stocks unexpectedly rose 4.9 million bbl last week, while refinery rates declined 0.2%. Domestic crude production edged higher to 11.1 million barrels per day (bpd) during the reviewed week.

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

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