Oil Futures Slip as Markets Eye Jobless Claims, Infections

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- In early trade Thursday, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange softened, with the U.S. crude benchmark consolidating below $60 barrel (bbl) as investors await the release of U.S. jobless claims that are expected to show further improvement in the labor market after more than a year contending with a pandemic. A speech from Federal Reserve Chairman Jerome Powell during an International Monetary Fund-led panel on the global economy after minutes from last month's Federal Open Market Committee meeting revealed broad agreement to keep interest rates low for longer.

The U.S. Dollar Index and Treasury yields eased to two-week lows in early trade after dovish FOMC minutes for their March 16-17 meeting showed the central bank would continue its support for quantitative easing policy until the economy achieves stronger employment and inflation.

"Participants noted that it would likely be some time until substantial progress toward the Committee's maximum-employment and price-stability goals would be realized and that, consistent with the Committee's outcome-based guidance, asset purchases would continue at least at the current pace until then," read the minutes.

The U.S. Federal Reserve first announced its $120 billion a month bond purchasing program over a year ago when the economy got hit with a demand-shuttering pandemic that triggered massive unemployment. U.S. jobless claims scheduled to be released 8:30 a.m. EDT are expected to show a modest improvement in new applications for unemployment benefits at 680,000 versus 719,000 in the week ended March 27.

U.S. economic data continue to indicate an accelerated demand recovery, with business activity in manufacturing and service sectors surging last month.

Even in the Eurozone, where governments have repeatedly resorted to lockdown measures to keep COVID-19 infections low, the economy appears to have recovered faster than expected, with business activity returning to growth for the first time since October 2020.

Media reports suggest the European Commission plans to ramp up vaccine production across the 23-nation bloc, moving forward its target date for expanded access to COVID-19 vaccinations as early as this summer. So far, only about 9% of European Union citizens have received at least one shot of a vaccine compared with 26% in the United States and 27% in Britain, according to figures from Bloomberg Vaccine Tracker.

The upbeat vaccine forecast for the Eurozone amplified upgraded economic projections by IMF to send equity futures higher in premarket trade Thursday.

Oil futures, nevertheless, continue to swing between shallow gains and losses as investors monitor coronavirus infection and vaccination rates in developing countries, as well as demand data domestically. Wednesday's inventory report showed gasoline and diesel stocks rose by 5.5 million bbl last week as demand for motor fuel declined slightly in the week leading up to the Easter holiday.

In early trading, NYMEX May West Texas Intermediate futures slipped 38 cents to $59.38 bbl and the June Brent contract on ICE fell 26 cents to trade just blow $63 bbl. NYMEX May ULSD futures declined 1.24 cents to $1.7957 gallon and NYMEX May RBOB futures traded little changed near $1.9512 gallon.

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

Liubov Georges