Oil Futures Mixed, USD Fades Ahead of Jackson Hole Summit

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange moved mixed in early trade Thursday, with the U.S. dollar retreating from a 20-year high as investors looked to the start of the Federal Reserve's Jackson Hole symposium where Chairman Jerome Powell is expected to update the markets on the direction of the central bank's monetary policy and ahead of the second reading on U.S. gross domestic product growth for the second quarter.

Investors will take a second look at U.S. economic growth Thursday morning that shockingly fell by 0.9% in the second quarter, according to the first estimate from the Bureau of Economic Analysis, following a steeper 1.6% decline for the first three months of the year. Technically, two consecutive quarters of negative growth means the economy fell into a recession -- a long-standing view that many policymakers and pundits now dispute. Powell himself has assured investors the U.S. economy is not in a recession, citing "too many sectors in the economy that are performing too well."

Since mid-July, a series of grim readings for the manufacturing sector, surging U.S. dollar and signs of retreating consumer may have blunted domestic growth enough for Powell to change his tone at this week's economic symposium in Wyoming. About one in six American households fell behind on their utility bills, according to National Energy Assistance Directors Association. Unemployment claims have been trending higher since early June and currently stand near an eight-month high at 250,000, with economists expecting more pain for the labor market as Feds continue to raise interest rates.

Still, 54.5% of investors bet on another 75-basis-point rate hike from the Fed, following two similar increases in June and July, according to the CME Group's FedWatch tool.

In early trading, the U.S. Dollar Index pulled back 0.28% against a basket of foreign currencies to trade near 108.305 after surging to a 20-year high 109.205 Wednesday afternoon. Weakness in the U.S. Dollar Index lent tepid support for the front-month West Texas Intermediate futures that gained $0.36 in overnight trade to near $95.27 barrel (bbl). International crude benchmark Brent futures for October deliver advanced to $101.83, up $0.73 from Wednesday's settlement. NYMEX September RBOB futures declined 0.77 cents to $2.7930 gallon, while the September ULSD contract added 6.32 cents to $4.0764 a gallon.

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

Liubov Georges