Oil Futures Lower on Weak Economic Data
WASHINGTON (DTN) -- After trading in narrow ranges for most of the Friday session, nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled mixed. Falling U.S. inventories and crude production countered a bearish demand forecast from the International Energy Agency and weaker-than-expected economic data out of the United States and China.
Oil futures were lent some support on Friday after the number of oil rigs in the United States declined for the 21st time in 22 weeks, down four to a fresh better than 15-year low at 172, according to data published by Baker Hughes. The oil rig count has fallen 598 from a year ago, with 479 of those rigs pulled from the service in the second quarter alone.
The oil complex was supported this week by U.S. government data showing crude oil, gasoline and distillate inventories fell last week as refiners ramped up production. U.S. crude oil supplies have declined for three consecutive weeks through Aug. 7, indicating a potential uptick in consumption.
The IEA's latest monthly report, however, indicates global demand will likely remain under pressure from "ongoing uncertainty caused by COVID-19, weakness in aviation and stalled mobility across several regions." The agency revised lower its demand estimates for 2020 and 2021, forecasting little to no improvement in jet fuel and kerosene demand. The Paris-based agency deepened this year's demand contraction to 8.1 million bushels per day (bpd), while OPEC sees a steeper drop of 9.1 million bpd, which is more than 9% below the last year's figure.
Downbeat economic data out of China and the U.S. this week further stoked demand fears, with the latest indicators pointing to slowing growth in the world's two largest economies. U.S. retail sales increased a mere 1.2% in July, the third straight monthly increase but weaker than the 2% rise forecast by economists. University of Michigan data showed consumer sentiment remained at depressed levels in early August at 72.8, only a few points off April's low.
Meanwhile, continued deadlock between congressional Democrats and the White House over a coronavirus aid package could be further limiting upside for the markets. Negotiations to extend measures, including supplemental unemployment benefits that expired at the end of July, have remained stalled this week.
At settlement, West Texas Intermediate crude oil for September delivery settled little changed at $42.01 per barrel (bbl) and the spot-month international Brent crude contract edged down to $44.80 per bbl. NYMEX ULSD September futures settled marginally lower at $1.2367 gallon and front-month RBOB futures rose about a penny to $1.2446 gallon.
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