DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange eroded further in early trade Friday, with both crude benchmarks on course for weekly losses of 7% and 6%, respectively, amid a one-two punch of a strengthening U.S. Dollar Index and lingering concerns over an uptrend in COVID-19 infections across major oil-consuming economies, with key macroeconomic indicators for the United States and China pointing to decelerating economic growth in the third quarter.

At the end of the dismal week for the oil complex, both crude benchmarks came under additional pressure from overnight advances by the U.S. Dollar Index and looming expiration of the September West Texas Intermediate contact. NYMEX September WTI traded at a fresh five-month low on the spot continuous chart at $63.17 barrel (bbl) ahead of its expiration Friday afternoon, with next-month delivery WTI contact holding a $0.20 discount. The international Brent benchmark for October delivery slipped $0.46 to near $65.98 bbl. NYMEX September ULSD dropped to $1.9381 gallon, and NYMEX September RBOB declined 4.15 cents or 2% to $2.0400 gallon.

The U.S. Dollar Index continued to trade higher against a basket of foreign currencies, climbing to 93.705 -- the highest trade since November 2020, as investors flee to the safety of the U.S. currency, further pressuring WTI futures.

The U.S. stock market is on track for its worst week in six months after minutes from July's Federal Open Market Committee meeting released Wednesday afternoon showed policy makers are likely to roll back $120 billion a month in asset purchases sooner than previously thought. FOMC participants emphasized the progress in the labor market remains a key metric for pulling back quantitative easing. Since then, early August data show the U.S. labor market added 943,000 new jobs in July and the unemployment rate fell to 5.4% -- a new pandemic era low. It was the biggest job gain since August last year, when more than one million positions were filled. Further evidence of a strengthening labor market was released Thursday by the Labor Department showing the number of Americans filling for first-time unemployment claims fell for the fourth straight week through Aug. 14 to a new pandemic low of 348,000.

Key economic indicators for the United States, including consumer sentiment and retail sales, highlighted rapid deceleration of growth in the third quarter. Goldman Sachs trimmed its third quarter U.S. gross domestic product forecast to 5.5%, noting the "impact of the Delta variant on growth and inflation is proving to be somewhat larger than we expected."

"Spending on dining, travel, ... is likely to decline in August, though we expect the drop to be modest and brief," they wrote in a note.

Earlier this week, the investment bank cut China's third quarter GDP growth to 2.3% from 5.8% while lowering their full-year growth forecast to 8.3% from 8.6%.

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