DTN Oil

WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange shifted lower in early trade Friday, with the U.S. crude benchmark falling below $41 barrel (bbl) as governors in almost half of the states reintroduced quarantine restrictions and reclosed contact sensitive businesses to slow the spread of coronavirus infections, with hospitals in the hardest-hit parts of the country nearing maximum capacity.

The speed and breadth of the pandemic in the United States could overwhelm some hospitals, with daily new infections topping 150,000 on Thursday, up 30% in the last four days, according to data from Center of Disease Control. The City of Chicago issued a four-week stay-at-home order on Thursday and New York City mulls similar restrictions heading into the Thanksgiving holiday.

Half of the states are now showing early signs of a second lockdown. Even without mandatory lockdowns people tend to self-isolate, and when they do, they spend less than what they typically would. Business owners around the country are worried that the second wave of infections could cause irreparable damage to the economy absent of the fiscal stimulus package from lawmakers on Capitol Hill.

Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde, and Bank of England Governor Andrew Bailey contributed to this sentiment by warning about a looming heath crisis in the winter months. While they acknowledged positive developments on the vaccine, all three banking chiefs said monetary and fiscal support is needed for some time.

Lawmakers in Washington, D.C. appear to have made little progress this week on a fiscal stimulus deal. Earlier this week, reports indicated stark differences remain unresolved between Senate Republicans and House Democrats on the size and scope of a relief bill.

Initial unemployment claims for the week ended Nov. 7 did improve to 709,000 and continued claims, the number of people receiving benefits for consecutive weeks, fell below consensus at 6.79 million, a decrease of 436,000 from the previous week's revised levels.

Later this morning, investors will get a chance to gauge the consumer outlook on the economy, with the University of Michigan's Consumer Sentiment survey for early November expected to edge higher from a six-month high 81.5 reading.

In early trading, the December West Texas Intermediate futures traded near $40.50 bbl, down 60cts, and the January Brent contract on ICE declined 48cts to $43.05 bbl. December ULSD futures slid 1.53 cents to $1.2180 gallon, and December RBOB futures fell 2.06 cents to $1.1365 gallon.

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

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