DTN Weekly Oil Update
Oil Steadies After US Rate Cut Gains as USD Strengthens
VIENNA (DTN) -- West Texas Intermediate futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange steadied Monday morning, after both crude oil benchmarks recorded large gains last week following the Federal Reserve's decision to cut interest rates by 50 basis points, with Brent and WTI posting the largest weekly gains since mid-June and early April, respectively.
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Since then, equities continued to see support, while gains in U.S. dollar-denominated commodities were limited by the strengthening currency. Bearish turning demand outlooks for China and the seemingly unremitting European industrial rut further capped gains in oil. Diesel demand in particular has been trailing year-ago levels both in the U.S. and Europe amid manufacturing and freight recessions, while growth in diesel demand in China was limited by a poorer-than-expected industrial recovery and the continued electrification of the transportation sector. Both state and Caixin Chinese manufacturing PMIs for September are scheduled for release Saturday night.
S&P's preliminary Eurozone manufacturing PMI for September released this morning fell to 44.8, down a full point from August and marking the lowest reading since January. U.S. manufacturing is also causing concern, with S&P's U.S. manufacturing PMI dropping to a 15-month low 47. U.S. durable goods orders for August are scheduled for release by the Census Bureau Thursday morning, as is the Bureau of Economic Analysis' (BEA) final reading for U.S. GDP growth in the second quarter.
On Friday, BEA's personal income and outlays report for August, which includes the Federal Reserve's preferred inflation metric, will help gauge the central bank's next steps.
Near 10:45 a.m. EDT, WTI futures for November delivery were trading near $71.15 barrel (bbl), up $0.15, and Brent for November delivery hovered around $74.56 bbl, up $0.07. October RBOB fell $0.0153 gal to $2.0211, while October ULSD was flat at $2.1635.
Karim Bastati can be reached at karim.bastati@dtn.com