DTN Oil

WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange settled Tuesday's session mostly higher supported by a sharp retreat in the U.S. dollar index amid signs of a cooling labor market and expectations U.S. commercial crude oil inventories sustained a destocking trend through the third week of August.

Moving in the opposite direction, the front-month RBOB contract came under selling pressure on Tuesday as Hurricane Idalia is seen disrupting holiday travel over the Labor Day weekend, forecast to make landfall in Florida as a Category 3 hurricane.

DTN Weather Ops forecasts Hurricane Idalia will bring major coastal flooding to much of Florida's Gulf Coast and spread heavy rains from Florida to southern Georgia and most of South Carolina, and eastern North Carolina. Embedded tornadoes within rainbands will also be a concern across the affected area over the next 36 to 48 hours. Idalia should emerge off the Carolina coastline Friday morning as a tropical storm, then is expected to sit in the Atlantic Ocean this weekend into early next week.

According to the National Hurricane Center, there is a danger of life-threatening storm surges along portions of the Gulf Coast, and the water may rise 8 to 12 feet above ground level in some areas. Idalia is all but certain to impact holiday travel over the Labor Day weekend, bringing a weaker-than-usual end to an already soft summer demand season. U.S. gasoline consumption remained below 9 million bpd for all but one of the past seven weeks despite the peak driving demand during the summer season.

In financial markets, the U.S. dollar nosedived and stocks on Wall Street advanced after job openings in the United States declined to the lowest level since March 2021, showed the Jobs Openings and Labor Turnover Survey released this morning by the U.S. Bureau of Labor Statistics. At 8.8 million, the number of unfilled positions last month was 800,000 below June's figure and bearish against expectations for 9.6 million open positions.

The fresh data might suggest the labor market is finally losing its post-pandemic momentum, with employers reducing the number of job openings under pressure from high interest rates and signs of a slowing consumer.

Separate data released this morning from the Conference Board showed consumer confidence in the U.S. fell sharply in August, erasing back-to-back gains over the June-July period. The Expectations Index was just a hair above 80, with a reading below 80 historically signaling a recession within the next year.

"August's disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular," Dana Peterson, Chief Economist at The Conference Board, said in comments released with the data.

A strong labor market has supported consumer spending and aggregate demand in the economy, leading to persistent inflation pressures in some core categories. Federal Reserve Chairman Jerome Powell, delivering the keynote address at the annual symposium in Jackson Hole, Wyoming, on Friday (8/25), warned the risk of inflation accelerating is still embedded in the economy.

"We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective," said Powell.

On the session, the U.S. dollar plunged 0.5% against a basket of foreign currencies to settle near a one-week low at 103.471, while spurring gains for the front-month West Texas Intermediate contract that jumped to $81.16 bbl, up $1.06 bbl on the session. The international crude benchmark Brent contract added $1.07 bbl for a $85.49 bbl settlement. NYMEX ULSD futures posted a modest gain to settle at $3.2095 and NYMEX RBOB September futures softened $0.0052 to $2.7905 per gallon.

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