Oil futures turned higher on Thursday after posting two consecutive sessions of declines, but worries about the daily rate of increase in new coronavirus cases in the U.S. and other countries is taking a toll on expectations for demand for crude, keeping prices lower for the week.
Some upbeat U.S. economic data and comments from a White House officials helped to calm traders’ nerves over the prospects for the economy.
“A big jump in durable goods and assurances by White House Economic Advisor Larry Kudlow that the U.S. was not going to shut the economy down gave us a boost,” said Phil Flynn, senior market analyst at The Price Futures Group.
“Cornavirus fears had been driving us lower, but…Kudlow reminded the market to put the coronavirus data in perspective and focus on the positive signs that are coming out of recent economic data,” he told MarketWatch.
Orders for durable goods in the U.S. jumped 15.8% in May, better than the 10.3% rise expected by economists polled by MarketWatch. Weekly initial jobless claims, meanwhile, fell slightly to 1.48 million from 1.54 million a week earlier.
Against that backdrop, West Texas Intermediate crude for August CLQ20, +0.21% tacked on 26 cents, or 0.7%, at $38.27 a barrel on the New York Mercantile Exchange, following a nearly 5.9% decline on Wednesday to mark its lowest finish for a front-month contract in a week, according to Dow Jones Market Data.
Global benchmark Brent oil for August delivery BRNQ20, +0.19% rose 36 cents, or 0.9%, to reach $40.67 a barrel on ICE Futures Europe, after receding 5.4% on Wednesday to the lowest level since June 15.
For the week, WTI is seeing a drop of 3.8% so far, while Brent has declined 3.6%.
Some U.S. states are reintroducing lockdown measures in the world’s largest economy, as well as companies including Apple AAPL, +0.42% and Walt Disney Co. DIS, -1.56%, reclosing or delaying re-opening businesses.
Delaying re-openings is “not attractive for oil traders who have been counting on improving demand,” Flynn wrote in a Thursday morning report.
The Energy Information Administration’s weekly petroleum data on Wednesday “did show a big 529,000 barrel a day leap in gasoline demand to 8.608 million barrels a day last week, almost getting back to pre-coronavirus levels,” he said. “The improvement would have been encouraging if it were not for the potential to see a reversal of U.S. states delaying reopening their economies.”
But the EIA’s report Wednesday showed that U.S. crude inventories rose for a third week in a row, by 1.4 million barrels for the week ended June 19. It also revealed that crude stocks at the Cushing, Okla., storage hub fell by about 1 million barrels for the week though, but total domestic oil production climbed by 500,000 barrels a day to 11 million barrels a day.
Commodity experts have also said that a grim outlook for the global economy from the International Monetary Fund published Wednesday weighed on oil sentiment. The IMF sees a global economic contraction of 4.9%, almost 2 percentage points lower than three months ago. “We are definitely not out of the woods. We have not escaped the great lockdown,” said Gita Gopinath, the IMF’s chief economist, at a press briefing.
Natural-gas futures traded sharply lower after the EIA reported Thursday that domestic supplies of the commodity rose by 120 billion cubic feet for the week ended June 19. That was more than the average increase of 107 billion forecast by analysts polled by S&P Global Platts.
July natural gas NGN20, -6.13% fell 5.2% to $1.514 per million British thermal units. The July contract expires at the end of Friday’s trading session.
Rounding out action on Nymex, July gasoline RBN20, -1.93% lost 1.5% to $1.1782 a gallon and July heating oil HON20, -1.40% shed 1.4% to $1.1353 a gallon.
Originally published on MarketWatch