Oil Futures Mostly Flat as COVID Resurgence Erodes Demand

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- After moving in narrow ranges for most of the session, West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange posted little change on Thursday as optimism over the rollout of two COVID-19 vaccines by the end of this year was countered by renewed efforts to reclose schools and businesses amidst a resurgence in coronavirus infections.

On the session, NYMEX December WTI futures settled 8 cents lower at $41.74 barrel (bbl ahead of expiration Friday afternoon, with January futures holding a 16-cent premium to the expiring contract. ICE January Brent futures eased to $44.20 bbl. NYMEX December ULSD futures firmed 0.67 cent to settle at a $1.2707 gallon fresh 4-month high on the spot continuous chart, while December RBOB futures settled the session near unchanged at $1.1625 gallon.

The second wave of coronavirus infections is sweeping though the United States with a vengeance, triggering stricter quarantine measures and reclosure of contact-sensitive businesses across the country. With COVID-related deaths in the United States surpassing 250,000 this week, U.S. Centers for Disease Control and Prevention recommended Thursday to avoid traveling during the Thanksgiving holiday -- typically the busiest travel season of the year.

"As we're seeing exponential growth in cases, and the opportunity to translocate disease or infection from one part of the country to another, leads to our recommendation to avoid travel at this time," Henry Walke, COVID-19 incident manager at the CDC, said in a call with reporters Thursday.

The latest development follows a move by New York City Mayor Bill de Blasio to reclose the nation's largest public school system this week, with millions of parents now hanging in limbo over keeping their jobs or tending to their children at home.

The evolving situation is playing out across the country and augers poorly for an already troubled labor market. U.S. Labor Department on Thursday morning reported initial unemployment claims increased during the week ended Nov. 14 to 742,000, up 31,000 from the prior's week upwardly revised levels, the first weekly increase in first-time claims in five weeks.

Deteriorating short-term expectations for gasoline demand followed concern that a widely expected extension in the current level of OPEC+ production cuts might not occur. That's the speculation after a Bloomberg report said the United Arab Emirates is seeking reevaluation of its output quota under the 7.7 million barrels per day (bpd) production cut agreement. The possible dissent from a close ally to Saudi Arabia who supports extending the current agreement into 2021 follows a meeting by the Joint Ministerial Monitoring Committee earlier this week which ended without a recommendation for OPEC+ decision members ahead of a Nov. 30-Dec. 1 meeting.

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

Liubov Georges