DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Thursday's session mixed, with RBOB and ULSD contracts softening on expectations for weaker demand growth this year after U.S. gross domestic product slowed more than expected in the first quarter, leading to lower refining margins and muted demand for petroleum products.

The U.S. economy has been caught between slowing growth and still-high inflation, showed macroeconomic data released Thursday, highlighting the tough challenge faced by the Federal Reserve.

U.S. GDP grew at just 1.1% during the first three months of the year, easing sharply from 2.6% seen over the final quarter of 2022, according to data released Thursday morning from the Bureau of Economic Analysis. Economists were mostly expecting a more robust reading of 2%. In the meantime, the Fed's preferred inflation metrics -- Personal Consumption and Expenditures -- picked up the pace to 4.9% in the January-through-March period, the quickest pace in a year. PCE index had fallen for three straight quarters from 7.5% recorded during the first quarter 2022.

High inflation is underscored by a still-tight labor market that continues to show signs of strength despite a slowdown in the broader economy. A separate report released Thursday morning showed applications for unemployment benefits fell for the first time in three weeks as the nationwide unemployment rate hovers around a 50-year low 3.5%.

The number of Americans filing for jobless claims for the week ended April 22 fell 16,000 to 230,000, the Labor Department reported Thursday.

Thursday's macroeconomic data strengthened the case for the Federal Open Market Committee to raise the federal funds rate by yet another 25 basis points at their May 2-3 policy meeting. Two-year Treasury yields climbed on that bet Thursday morning, while U.S. dollar strengthened to 101.252, up 0.046% against a basket of foreign currencies.

As the economy slows, refiners in the United States, Northwest Europe, and Asia have suffered weaker profit margins, particularly for making diesel fuel amid lower consumption due to reduced manufacturing and trade activity. Diesel margins for European refiners halved since the start of February, according to Bloomberg News, with speculators amassing their biggest bearish position in Europe's diesel benchmark since 2020.

In the U.S., refining margins have fallen sharply to the lowest level in a year. Last year, refining margins soared to record highs following the Russian invasion of Ukraine, resulting in windfall profits for the refining complex.

At settlement, NYMEX June West Texas Intermediate futures advanced to $74.76 per barrel (bbl), up $0.46 per bbl on the session, while international crude benchmark ICE Brent futures for June delivery gained $0.68 per bbl to $78.37 per bbl. NYMEX May RBOB futures eroded to $2.5328 per gallon, down $0.0166 on the session, and May ULSD futures edged $0.0188 lower to $2.3542 per gallon.

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