WASHINGTON (DTN) -- Crude and refined product futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange retreated Friday afternoon. The losses occurred in concert with falling equities as investors turned their focus back to a record surge in coronavirus infections domestically that have already triggered renewed quarantine restrictions in some hard-hit states, undercutting an already underwhelming recovery in fuel demand.
Road usage in the United States is 35% below the post-lockdown peak reached in September as a second wave of coronavirus infections sweeps through the large swaths of the country. On Thursday, Nov. 5, the U.S. daily case count topped 120,000 -- nearly double the cases recorded at the beginning of the week. Even as markets were dominated by U.S. presidential elections and legal hurdles surrounding the results this week, investors returned their attention to mounting coronavirus cases and the inevitable reduction in mobility.
In the European Union, renewed lockdowns are beginning to bite economically, with the European Commission not expecting economic growth in the EU returning to its pre-pandemic level until at least 2023. The commission revised lower its economic projections for the 19-nation bloc in both 2020 and 2021, forecasting a 7.5% contraction for the current year. Global oil trader Trafigura estimates the EU lockdowns will shave off at least 1.5 million barrels per day (bpd) in global oil demand by the end of the year.
Also this week, Saudi Aramco lowered its official selling prices for the U.S. refineries where fuel demand has been trending lower for weeks. Wednesday's inventory data from the U.S. Energy Information Administration showed gasoline supplied to the U.S. market, a measure for demand, decreased 209,000 bpd from the previous week to 8.336 million bpd, widening its year-on-year deficit to 8.8%.
Further pressuring prices, Baker Hughes Friday afternoon reported domestic producers increased the number of active oil rigs for the seventh consecutive week, up five from prior Friday to a 226 5 1/2-month high. The prolific Permian Basin in West Texas and New Mexico, as well as the Eagle Ford in South Texas and the Cana Woodford region in Oklahoma all logged weekly increases to their oil rig count, while some smaller regions saw their rig counts decline.
The U.S. oil rig count is up 43 rigs in the fourth quarter while down 451 year to date, and 684 less than during the comparable week a year ago.
On the session, NYMEX December West Texas Intermediate futures fell $1.65 to below $38 at $37.14 per barrel (bbl), and the January Brent contract on ICE declined $1.48, falling below $40 to $39.45 per bbl at settlement. NYMEX December ULSD futures slumped 2.7 cents to finish the session at $1.1426 per gallon and the December RBOB contract retreated 3.15 cents to $1.0844 gallon.
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