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, liubov.georges@dtn.com, http://www.dtn.com.




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