WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange softened in early trade on the last business day of July, with all the petroleum contracts on course for 1% weekly gains spurred by supportive U.S. inventory data showing across-the-board draws from commercial crude and refined products stocks, and accommodative monetary policy from the Federal Reserve that pledged this week to keep interest rates near zero until the U.S. economy makes a full recovery from the pandemic-induced recession.
West Texas Intermediate futures were supported this week by a weaker U.S. dollar, with the dollar index falling to a one-month low 91.871 settlement Thursday under pressure from a combination of bearish factors. This week's dovish Federal Open Market Committee meeting left the benchmark interest rate unchanged between a 0% and 0.25% target range, giving no clear indication on when the central bank would start tapering its $120 billion a month in bond purchases. The greenback was further pressured Thursday after a preliminary estimate for second quarter gross domestic product showed the economy expanded by 6.5% during the April-June period, missing expectations for an 8.5% growth rate. First quarter GDP was also revised lower to 6.3% from 6.4%.
Rising consumer prices and labor shortages have chipped away a larger chunk of last quarter's growth rate despite trillions of dollars spent to fuel the economy. Investors will get an update on U.S. inflation with this morning's release of Personal Income and Consumption Index for June. Consensus calls for the Bureau of Economic Analysis' PCE index to have increased 4.1% year-on-year after posting a 3.9% gain in May. The expected increase follows comments by Fed Chairman Jerome Powell at midweek reiterating inflation is likely to be transitory and to fade over time despite running above the central bank's 2% target.
Additionally, U.S. initial jobless claims for the week ended July 23 were bearish against expectations, with the Labor Department reporting 400,000 filings compared with market estimates for a 390,000 reading, with the previous week's initial filings revised 5,000 higher. U.S. labor market is still short 8.5 million positions compared with the before the pandemic.
Overnight data from Eurozone showed the 19-member economy expanded by 2% in the second quarter, beating expectations for 1.5% growth, and following recession. The region contracted 0.3% in the first quarter and 0.6% in the final quarter of 2020, with two consecutive quarters of economic contraction a technical recession.
Portugal, Austria and Latvia registered the highest quarterly growth rates. Large economies of France and Germany, however, underwhelmed expectations with a 0.9% and 1.5% growth rate, likely hit by supply constraints related to pandemic-disruptions and rising consumer process.
Also, Germany published its preliminary estimates of July inflation overnight, with the annual Consumer Price Index jumping to 3.8%, well above the 3.3% expected.
Near 7:30 a.m. EDT, NYMEX September WTI slipped $0.17 to $73.46 barrel (bbl) and ICE September Brent futures hovered near $76 bbl, widening its premium against October contract to $1.05. NYMEX August RBOB contract fell 1.11 cents to $2.3403 gallon and next-month delivery September futures narrowed its discount to the expiring contact to 2.44 cents gallon. NYMEX August ULSD contract softened 0.64 cents to $2.1830 gallon, with September futures at parity with August delivery. ICE September Brent, and NYMEX August ULSD and RBOB futures expire Friday afternoon.
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