Oil Futures Mixed in Consolidation Trade After Monday Drop

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange settled mixed Friday following a week of consolidation trade after Monday's selloff, with West Texas Intermediate and Brent crude sliding more than 2% on the week on a stronger U.S. dollar and renewed demand worries amid flare ups in coronavirus infections in several major economies while the prospect for additional U.S. stimulus fades.

NYMEX West Texas Intermediate futures for November delivery settled Friday just above $40 per barrel (bbl) at $40.25 a bbl, while shedding more than $1 from last Friday's close. International crude benchmark November Brent contract fell a steeper $1.20 or 2.5% from the previous week to $41.98 bbl. NYMEX October ULSD futures gained 95 cents on the session to $1.1262 gallon but were down more than 3 cents on the week, and front-month RBOB futures advanced 1.85 cents for a $1.2142 gallon settlement, while shedding some 2 cents or 1.7% on the week.

A strengthening greenback, which advanced to a 2-1/2 month high 94.795 on Friday was a major headwind for oil prices this week, with the strengthening currency making dollar-denominated commodities like oil more expensive for foreign traders. Adding another layer of volatility, equity markets seesawed this week between deep losses and gains as investors sorted through headlines out of Washington, D.C. for the potential passing of a new coronavirus aid package amid high unemployment while macroeconomic data suggests stalling growth for the U.S. economy.

U.S. manufactured durable goods orders in August dropped below expectations at 0.4%, down sharply from an 11.7% spike last month, according to the data published this morning by the U.S. Department of Commerce. Softening sales orders join slowing industrial production, which increased a mere 0.4% during August and sluggish retail sales that faded below 1% last month compared to a 7.5% jump in July.

Against these headwinds, investment bank Goldman Sachs this week cut in half its outlook for fourth quarter economic growth, forecasting a 3% expansion rate for the last three months of 2020.

According to Atlanta GDP now growth tracker, U.S. economy during the third quarter is running at a 32% annualized growth rate even as it sees nearly 900,000 new layoffs each week, with the high unemployment questioning the sustainability of the growth rate into year's end. unsustainable.

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

Liubov Georges