WASHINGTON (DTN) -- Nearest delivery month oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange shifted lower in early morning trade Thursday following industry data showing U.S. commercial crude and distillate stocks unexpectedly rose last week, stoking fears about glutted supplies as the domestic economy struggles to regain its pre-pandemic growth rate.
The American Petroleum Institute late Wednesday reported nationwide crude oil inventories increased 2.970 million barrels (bbl) during the week ended Sept. 4, contrasting sharply with expectations for a 1.2 million bbl drawdown. At the Cushing supply depot in Oklahoma, the delivery location for the New York Mercantile Exchange West Texas Intermediate futures contract, inventory gained for the second time in three weeks, up 2.608 million bbl from the previous week. Gasoline supplies tumbled a more-than-expected 6.892 million bbl and distillate inventories increased 2.293 bbl versus estimates for a 1 million bbl draw.
Traders now await official inventory data from the U.S. Energy Information Administration to be released at 11 a.m. EDT.
The bearish weekly report followed a downgrade in the global oil demand outlook for the rest of 2020 by the EIA, with the agency citing lower-than-expected consumption growth in China for the revision. EIA estimates global oil demand in August grew by 1 million barrels per day (bpd) from the previous month, the slowest month-over-month increase since consumption began to recover in May, and the first time during that period that consumption growth was surpassed by growth in world oil production.
In early trade, WTI for October delivery dropped 64 cents to trade below $38 bbl at $37.40 bbl and the international crude benchmark Brent November contract shed 48 cents to $40.30 bbl. NYMEX ULSD October plunged 2.28 cents or 2% to $1.0836 gallon and the front-month RBOB contract traded little changed at $1.1155 gallon.
On the economic data front, investors await the weekly release of U.S. jobless claims due out at 8:30 a.m. EDT, with consensus calling for first-time unemployment application filings to have eased below 900,000 during the week ended Sept. 5.
The labor market has gradually recovered over the summer months, albeit at a slower pace compared with the initial bounce back after states first lifted quarantine restrictions, while job losses remain historically high. The latest figures from the Department of Labor show the U.S. economy added 1.37 million jobs in August but still needs to recoup about 11.5 million more jobs to reach the employment level before the pandemic.
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