Oil Futures Climb After EIA-Driven Sell-Off, Jobs in Focus

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange edged higher in early trade Thursday following Wednesday's inventory data-driven losses as traders grew more concerned about sluggish fuel demand and economic activity in the fourth quarter while waiting for weekly U.S. unemployment claims for fresh clues on the recovery in the battered labor market.

First-time unemployment claims in the United States during the week ended Oct. 17 are estimated to have fallen from prior week's 898,000, the first increase in more than a month, to 865,000. The layoffs have remained high this fall, and new hiring has slowed as businesses adjust to the disruption caused by the pandemic, while coronavirus infections in some parts of the country increase and another round of fiscal stimulus is debated in Washington.

U.S. labor market regained more than half of the 22 million jobs lost in March and April, although the pace of those gains slowed significantly in early fall. In its Beige Book released Wednesday, U.S. Federal Reserve estimated economic activity expanded at a slight to modest pace at the end of the third quarter and employment activity remained sluggish, suggesting little upside for the labor market in the fourth quarter.

Data from the Energy Information Administration released Wednesday showed demand for gasoline eroded for a second week through Oct. 16 to the lowest weekly rate since mid-June when the country's most populous states, Texas and Florida, battled a resurgence of the coronavirus. At 8.289 million barrels per day (bpd), gasoline supplied to the U.S. market, a measure for demand, was down nearly 14% against a year ago and 10% below the five-year average. Mobility data collected by Apple. Inc. shows traffic in the United States has trended lower in recent weeks in line with weaker demand for gasoline. Stockpiles of the transportation fuel also unexpectedly increased 1.9 million barrels (bbl) last week contrary to expectations for a drawdown.

In early trading, the December West Texas Intermediate futures edged 35 cents higher to near $40.40 bbl and December Brent crude on ICE added nearly 40 cents to trade near $42.10 bbl. NYMEX ULSD November futures gained 0.8 cents to $1.1480 gallon and the front-month RBOB contract gained nearly 1cts from a three-week low to $1.1490 gallon after falling more than 4% prior session.

U.S. equity futures slipped, and dollar index moved off a 92.460 six-week low to trade just below 93.

Markets are closely watching news on discussions for another stimulus package from U.S. lawmakers due to pandemic caused economic disruption. The White House has increased the size of the package to the roughly $2.2 trillion demanded by the House but disagree on how the funds would be dispersed. President Donald Trump said Wednesday that he would not accept a deal, which includes a bailout for "poorly run Democratic cities and states," a carveout in the House proposal demanded by Speaker Nancy Pelosi, a legislator from California whose state would benefit from the House bill. Senate Republicans have so far balked at the size of the stimulus package, although Senate majority leader Mitch McConnell said he would bring to the Senate floor the bill if the White House and House reach a deal.

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

Liubov Georges