DTN Oil

WASHINGTON (DTN) -- Nearby delivery month oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled lower for the fourth consecutive session Tuesday, sending the U.S. crude benchmark below $67 barrel (bbl) as increased COVID infections sour consumer sentiment and economic indicators domestically show slowing growth in the third quarter.

U.S. retail sales fell 1.1% in July as American consumers curtailed spending on restaurants, bars and gas stations while the rapid spread of the Delta coronavirus variant kept spending in check. Consumer spending was down broadly across all categories, with deeper weakness in auto sales and clothing subgroups. Weaker-than-expected retail sales follow an eyepopping drop in the consumer sentiment index, down 13.5% in early August, with responders citing the recent uptrend in COVID-19 cases behind the staggering loss in confidence. Richard Curtin, the survey's chief economist, said the decline was due "mainly from dashed hopes that the pandemic would soon end."

The Centers for Disease Control and Prevention reported the seven-day moving average for new COVID-19 cases in the United States was 108,470 as of Aug. 15, more than seven times the average at the start of July, with the highest number of daily cases since January occurring on Aug. 12 at 146,949.

Signs of slowing in the U.S. economy joined third quarter weakness in China, where retail sales, industrial production and fixed asset investment fell far short of expectations, with natural disasters and climbing COVID-19 cases adversely affecting consumer spending while slowing industrial production from 8.3% in June to 6.4% in July.

China's refineries also processed less crude in July, down 6% from a record high of 14.86 million barrels per day (bpd) in June to 13.9 million bpd, while 0.9% lower year-on-year, according to the National Bureau of Statistics. Increased restrictions on mobility enforced by the Chinese government to slow the highly transmissible Delta coronavirus variant is seen reducing China's average crude throughput by 100,000 bpd from the second quarter to around 14.6 million bpd in the third quarter.

NYMEX September West Texas Intermediate futures settled down $0.70 at $66.59 bbl ahead of expiration on Friday, with the October contract ending at a $0.25 discount. ICE October Brent crude settled $0.48 lower at $69.03 bbl. NYMEX September RBOB futures lost 3.53 cents with a $2.1656 gallon settlement, and September ULSD futures fell 1.22 cents to $2.0361 gallon.

This afternoon, the American Petroleum Institute reported a 1.163 million bbl drawdown in commercial crude stocks for the week ended Aug. 13 versus calls for a 1.3 million bbl decline, while stocks at the Cushing, Oklahoma, tank farm fell 1.735 million bbl. Gasoline stockpiles fell 1.197 million bbl compared with calls for a 2.1 million bbl draw, while distillate inventories rose 502,000 bbl with the market anticipating a 100,000 bbl increase.

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