WASHINGTON (DTN) -- Nearby-delivery month oil futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange pulled back in morning trade Thursday, with the new front-month December West Texas Intermediate falling below $83 per barrel (bbl), pressured by the strengthening U.S. Dollar Index and risk-off sentiment in financial markets after U.S. unemployment claims unexpectedly fell to a fresh pandemic-era low last week, indicating steady progress in the domestic labor market.
Near 10:00 a.m. ET, NYMEX WTI futures for December delivery fell $0.61 to $82.76 bbl, while the December ICE Brent futures managed to hold the ground above $85 bbl. November RBOB futures on NYMEX declined 1.05 cents to $2.4979 gallon, and front-month ULSD futures fell 2.74 cents to $2.5649 gallon.
The U.S. Department of Labor Thursday morning reported weekly jobless claims fell to a fresh pandemic low of 290,000 as of Oct. 16, down 6,000 from the previous week, with employers trying to avoid layoffs due to labor shortages. Continuing claims, meaning the number of Americans collecting unemployment benefits for consecutive weeks, also fell to their lowest level since the COVID-19 crisis began, dropping to 2.48 million, a decline of 122,000 from the previous week. The latest claims data reflects a labor market that has made considerable progress in reducing layoffs since its pandemic-era peak of 6.15 million applications each week. The steady move lower in first-time filings this month coincides with a jump in demand for labor and continued strength in consumer spending.
In its latest Beige Book released this week, the U.S. Federal Reserve said ongoing labor shortages have already slowed economic growth this fall. "Outlooks for near-term economic activity remained positive, overall, but some districts noted increased uncertainty and more cautious optimism than in previous months," according to the summary of information from the Fed's 12 regional districts, prepared as part of a broad range of briefings ahead of policymakers' Nov. 2-3 meeting.
December WTI futures settled at a seven-year high Wednesday, driven by tight supply fundamentals and expectations for increased demand from gas-to-oil switching in power generation. Also, helping to drive those gains, the federal U.S. inventory report released Wednesday morning showed total commercial crude and petroleum product supplies declined by a massive 9.7 million bbl in the week ended Oct. 15, with gasoline consumption spiking above 9.6 million barrels per day (bpd) and domestic production unexpectedly declining 100,000 bpd to 11.3 million bpd.
Domestic refiners, meanwhile, continued to reduce run rates, which fell by 2 percentage points to 84.7%, suggesting continued rollout of seasonal maintenance programs. As a result, domestic gasoline stockpiles dropped by a larger-than-expected 5.4 million bbl last week, compared with analysts' expectations for inventories to decrease by 1.1 million bbl. Distillate inventories, which includes heating oil and distillate fuels, fell by 3.9 million bbl to 125.4 million bbl, and are now about 10% below the five-year average. Analysts were forecasting a much smaller 900,000 bbl decline.
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