WTI Up 12%, Brent 13% in August as Demand Recovers, USD Falls
WASHINGTON (DTN) -- After posting gains early in the session, nearby month delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled lower on Monday, with selling accelerating in RBOB and ULSD futures ahead of September contract expirations this afternoon, while speedy recovery of U.S. Gulf Coast refineries following Hurricane Laura, the first major hurricane of the 2020 Atlantic basin season, added to the selling pressure.
NYMEX RBOB September futures expired 3.94 cents or 3% lower at $1.2761 gallon, which follows last week's $1.4395 six-month spot high traded as Hurricane Laura lashed the Gulf Coast. New front-month October futures narrowed its discount to the September contract to 5.98 cents with a $1.2159 settlement. The differential between September/October RBOB futures reflect gasoline's seasonal characteristics as summer driving season slows after the Labor Day weekend.
NYMEX ULSD September futures expired 2.01 cents lower at $1.1961 gallon, with October futures assuming front-month position at $1.2239 gallon.
NYMEX October West Texas Intermediate futures edged 36 cents lower to finish the session at $42.61 per barrel (bbl), while gaining about 12% in August, and the international crude benchmark Brent contract settled down 53cts at $45.28 bbl, adding more than 13% in price on the month.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell 0.18% to a two-year, four-month low 92.21, lending support for WTI futures. The greenback posted its fourth consecutive monthly decline in August, continuing to weaken against all other major currencies.
Earlier in the session oil futures were bolstered by data showing further improvement in China's service sector, including air travel and hospitality. Beijing's official non-manufacturing PMI index stood at 55.2 in August, up sharply from 54.2 in July.
Investors were relieved to see the world's second-biggest economy keeps recovering from the impact of the coronavirus pandemic, including parts of the economy that were hit by the pandemic the hardest. In reaction to the stronger-than-expected reading, Asia's markets rallied on Monday, sending the Shanghai Composite index up 0.8% and The Nikkei 225 added 1.8%, rebounding after Japanese Prime Minister Shinzo Abe announcement of resignation triggered heavy selling on Friday.
Domestically, rig operators in the Gulf of Mexico restored nearly half of the shut-in offshore crude-oil production on Monday, according to the latest estimate by the Bureau of Safety and Environmental Enforcement. Based on data from offshore operator reports submitted as of 12:30 p.m. ET, personnel remain evacuated from a total of 117 production platforms, 18.2% of the 643 manned platforms in the Gulf of Mexico.
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