WTI, Brent Futures Settle Flat as Fed Eases Inflation Fears

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Thursday's session little changed, with U.S. dollar and Treasury yields retreating to two-week lows after initial jobless claims unexpectedly rose for the second consecutive week and Federal Reserve Chairman Jerome Powell reiterated the economy is far from reaching the central bank's target of maximum employment and an inflation rate above 2%.

On Thursday, Powell said in a virtual meeting of the International Monetary Fund the Fed "would be monitoring improvement in the economy and expectations for inflation very carefully," adding the central bank would react swiftly if prices move "persistently and materially above levels we're comfortable with."

Further easing concerns over rising inflation, minutes from the Federal Open Market Committee's March meeting released Wednesday revealed a virtual consensus among central bank officials that the economy has yet to meet requirements that would warrant scaling back its massive bond buying program enacted last year.

"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.

Additionally, U.S. Labor Department said Thursday jobless claims jumped above expectations for the second week in a row to 774,000 with California and New York leading the increase in nationwide unemployment applications.

Following downbeat data, U.S. equities briefly slipped before closing barely in positive territory, with Dow Jones Industrials up 42 points at 33,488.32 and S&P 500 gaining 0.37%. The dollar index which measures the U.S. currency against a basket of six global currencies, edged lower to 92.30 in afternoon trading, after dipping as low as 92.134 -- the lowest index value since March 23. The index rallied to an almost five-month high of 93.439 at the end of March as the U.S. economic recovery from the pandemic outpaced that of most other developed nations, particularly in Europe.

The European Commission said this week vaccinations would accelerate sharply in the second quarter, indicating Europe's vaccine rollout campaign could reach its target earlier than expected. This assumes most member states will have sufficient vaccine supplies to immunize the majority of their population by the end of June, according to a memo circulated to national delegations in Brussels.

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.

On the session, NYMEX May West Texas Intermediate futures slipped 17 cents to settle at $59.60 barrel (bbl) and the June Brent contract on ICE finished at $63.20 bbl. NYMEX May ULSD futures added 0.19 cents to $1.8098 gallon and NYMEX May RBOB futures edged up 0.75 cents to $1.9593 gallon.

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

Liubov Georges