DTN Oil

WASHINGTON, D.C. (DTN) -- West Texas Intermediate (WTI) futures on the New York Mercantile Exchange (NYMEX) and Brent crude traded on the Intercontinental Exchange stalled near five-month lows on Thursday as investors turned cautious ahead of the U.S. employment report that is expected to show moderate job growth in November as employers pulled back on new hiring and the economy slowed sharply from a robust third-quarter growth rate.

The U.S. labor market likely added between 110,000 and 240,000 jobs last month, according to consensus, which is in the same ballpark as the 150,000 jobs created in October. The jobless rate is expected to hold steady at 3.9%. Should November's employment report come in as expected, the rate of job growth would be roughly in line with the healthy labor market seen over the years leading up to the COVID-19 pandemic.

However, if the headline number underwhelms expectations, that could signal the labor market is cooling more than expected given the sharp slowdown in projected fourth-quarter gross domestic product. Atlanta GDPNow forecast shows the U.S. economy is currently growing at a 1.2% annualized rate, down sharply from the 5.2% growth rate for the third quarter.

Oil futures came under modest pressure Thursday following overnight trade data from China, showing crude inflows into Asia's largest economy last month declined over 1 million barrels per day (bpd) from October's 11.53 million bpd import rate. At 10.33 million bpd, Chinese oil imports were almost 9% below a year ago when China's economy was under COVID-19 lockdown.

In its November Oil Market Report, Organization of the Petroleum Exporting Countries (OPEC) estimated China's oil demand would climb to 16.29 million bpd during the October-December period -- the strongest quarterly consumption rate of 2023.

The fresh data should cast some doubt on this forecast given the struggles of China's manufacturing sector in recent months and the inability of Beijing to deliver meaningful stimulus for its stalled economy. Earlier this week, Moody's Investment Services downgraded its outlook on China's government credit from stable to negative, expecting structural problems within the Chinese economy to continue to weigh on its post-COVID growth trajectory.

"A lack of predictability in the tools and commitment to support the private sector could constrain investment and in turn productivity growth more severely," Moody's reported Tuesday.

On the session, WTI futures for January delivery on NYMEX registered little change to settle at $69.34 per barrel (bbl) after the contract plunged below $70 bbl Wednesday for the first time since July. International crude benchmark Brent on ICE slipped $0.25 bbl in the session to settle $0.05 above $74 bbl. NYMEX RBOB January futures eroded in the session to a $2.0012-gallon two-year low settlement on the spot continuous chart, down $0.0290 on a combination of weak demand and rising stockpiles. U.S. Energy Information Administration reported Wednesday that domestic gasoline inventories spiked 5.4 million bbl last week after stockpiles rose 1.8 million bbl in the prior week.

NYMEX ULSD futures for January delivery fell $0.0270 to $2.5492 per gallon.

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