Oil Futures Chase Equities Higher on Stimulus Hopes, Jobs
WASHINGTON, D.C. (DTN) -- In afternoon trade Thursday, oil and refined
product futures on the New York Mercantile Exchange and Brent crude on the
Intercontinental Exchange turned higher in concert with surging equities after
House Speaker Nancy Pelosi signaled progress towards reaching a deal in
back-and-forth stimulus talks with the White House and unemployment claims
unexpectedly dropped to the lowest level since the coronavirus pandemic
shuttered labor market eight months ago.
At settlement, the December West Texas Intermediate futures added 61cts to
$40.64 bbl and December Brent crude on ICE gained 73cts to $42.46 bbl. NYMEX
ULSD November futures advanced more than 2cts for a $1.1607 gallon settlement
and the front-month RBOB contract gained 1.78cts to $1.1581 gallon, bouncing
off Wednesday's $1.1490 gallon three-week low settlement.
U.S. equities surged and the dollar index strengthened after the number of
first-time unemployment claim filings unexpectedly dropped below 800,000 to
787,000 during the week-ended Oct. 17, according to data released this morning
by the U.S. Department of Labor. Claims from the prior two weeks were also
revised lower, likely reflecting new data from California that paused
processing first-time claims in mid-September to address fraud.
Today's unemployment data nullified what was thought to be a trend reversal
week prior when the Labor Department reported an upturn in initial claims
filings which were linked to increased coronavirus cases and the failure for
Congress to pass more stimulus after some benefits expired over the summer.
Nearly 800,000 newly unemployed is certainly something not to cheer, and if
the second wave of coronavirus infections in parts of the United States and
Europe spread, there could be renewed lockdowns that further derail the U.S.
economy that's already seen slowing in the fourth quarter following sharp
growth estimated in the third quarter. Released Wednesday afternoon, the latest
Beige Book from the U.S. Federal Reserve warned the U.S. economy expanded at a
modest level at the end of the third quarter, and that employment growth slowed
far below the pre-crisis level.
Energy Information Administration data Wednesday showed implied gasoline
demand in the United States declined for a second week through Oct. 16 to the
lowest weekly rate since mid-June at 8.289 million bpd. Constrained gasoline
demand reflects high unemployment, and also caution by many in the country
limiting trips to restaurants and elsewhere over concern about the coronavirus.
EIA's disappointing demand statistics correspond closely with recent decrease
in traffic volumes in the United States, with Apple mobility data showing
driving activity have been trending lower in the most recent weeks.
Liubov Georges, 1.646.359.4088, email@example.com, http://www.dtn.com
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