Crude Futures Fade to 5-Month Low

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Crude and petroleum products futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange settled Thursday's session lower, although all contacts moved off intrasession lows. The losses came as market participants weighed better-than-expected economic data in the United States and China against prospects of a double-dip recession in the European Union after governments there reimposed lockdowns to slow a second wave of COVID-19 infections.

Stocks on Wall Street halted a three-day rout on Thursday after government data reported U.S. gross domestic product for the third quarter expanded at a 33.1% better-than-expected annualized rate and first-time unemployment claims continued to trend lower, falling to the lowest level in seven months at 751,000 during the week ended Oct. 24.

Although the data was supportive for the oil complex, it still failed to offset the lockdown shocker out of the European Union this week and increased risks for contraction in the fourth quarter.

As traders continued to reassess their demand outlook for the final months of the year, both the West Texas Intermediate and Brent contracts declined for the fourth straight session Thursday, settling at their lowest price point in five months.

Eurozone's largest economies, Germany and France, announced Wednesday new lockdown measures to contain the recent surge of infections, which sent hospitals in major European cities to near-breaking capacity this week. The renewed quarantine measures will allow for schools and factories to remain open but shutter nonessential businesses, including restaurants, bars and retail stores, effectively freezing a large chunk of the 19-nation bloc's economy.

"In the current environment of risks clearly tilted to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate," said Christine Lagarde, president of the European Central Bank during the Governing Council meeting on Thursday.

During the meeting, the ECB left interest rates unchanged at 0% in line with market expectations but indicated more stimulus measures might be unveiled at the Council's next meeting on Dec. 12.

Separately, oil producers in the offshore U.S. Gulf of Mexico shut-in an additional 18.2% in crude oil production over the past 24 hours to a total of 84.8% or 1,569,517 million barrels per day as of Thursday afternoon. Hurricane Zeta slammed the Louisiana coastline late Wednesday afternoon as a Category 2 storm before dissipating into a tropical depression as it makes its way inland.

On the session, December WTI futures declined more than $1 to settle just above $36 per barrel (bbl) at $36.17 per bbl and ICE December Brent tumbled $1.47 to settle at a $37.65 per bbl five-month low on the spot continuous chart. The second-month delivery January Brent contract expanded its premium to 61 cents ahead of the December contract's expiration Friday afternoon. NYMEX November ULSD futures plunged 2.58 cents or 1.9% to $1.0884 gallon, with December futures slipping to a fractional discount to the expiring contract. NYMEX November RBOB futures dropped back 2.99 cents to $1.0515 gallon, with the second-month delivery December contract widening its discount to 2.35 cents.

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

Liubov Georges