WASHINGTON (DTN) -- Oil futures in nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange fell Thursday, with the prompt-month RBOB contract sliding 5%. The drops came as traders assessed damages to U.S. Gulf Coast refineries after Hurricane Laura, the first major storm of the 2020 Atlantic hurricane season.
Laura, which has been downgraded to a tropical storm, appears to have caused no major flooding in the heart of the U.S. refining industry after the storm surge wasn't as bad as initially feared. The overall path of the hurricane also seemed to have missed Port Arthur, Texas, home to some of the nation's largest refineries.
Oil futures only briefly pared losses after reports emerged of some type of chemical spill at a chlorine plant near refineries in Lake Charles, Louisiana, which Louisiana Gov. John Bel Edwards called a "chemical fire."
Louisiana and Texas refineries and liquefied natural gas terminals were almost entirely shut down this week ahead of the storm's landfall.
The Bureau of Safety and Environmental Enforcement Thursday afternoon said operator reports estimate approximately 84.3% or 1,559,314 barrels per day (bpd) of the current oil production in the Gulf of Mexico was shut-in as a result of Hurricane Laura, little changed from the day prior.
In broader markets, U.S. equities rallied on Thursday, sending the Dow Jones Industrial 300 points higher and S&P 500 up 0.50% after Federal Reserve Chairman Jerome Powell announced a new policy framework that could keep interest rates lower for a longer. The Fed's chief said the central bank is willing to allow inflation above the traditional 2% cap in an effort to support the labor market and broader economy. During his speech at the Federal Reserve's annual Jackson Hole economic symposium, Mr. Powell said, "Many find it counterintuitive that the Fed would want to push up inflation. Maximum employment is a broad-base and including goal." He then added that the central bank expects the labor market not to recover to its pre-pandemic levels for at least a couple of years. Market consensus calls for the overall unemployment rate to remain roughly above 10% through the end of the year.
U.S. Labor Department data released Thursday morning show the number of Americans who filed for first-time unemployment benefits claims during the week ended Aug. 21 totaled 1 million, roughly in line with expectations. It marked the second consecutive week that weekly jobless claims tallied more than 1 million. Continued jobless claims showed the number of people receiving benefits for consecutive weeks dropped 223,000 to 14.535 million in the week reviewed.
Meanwhile, second-quarter U.S. Gross Domestic Product was revised upward to a 31.7% decline, versus an expected 32.5% drop. The initial reading on July 30 showed a 32.9% fall in economic activity. While the latest reading was slightly better, it still marks the largest quarterly plunge on record.
At settlement, NYMEX October West Texas Intermediate crude oil futures declined 35 cents to $43.04 per barrel (bbl) while spot month RBOB futures plunged 7.61 cents to $1.2845 gallon and front-month ULSD futures dropped 3.40 cents to $1.2107 per gallon. ICE October Brent crude fell 55 cents to $45.09 per bbl.
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