This post was originally published on this site
Oil futures were mixed Thursday, trading near five-month highs, as investors weighed a surprising fall in U.S. weekly first-time jobless claims against worries about lackluster fuel demand.
West Texas Intermediate crude for September delivery CL.1, -0.37% CLU20, -0.37% was down 14 cents, or 0.3%, at $42.05 a barrel on the New York Mercantile Exchange. October Brent crude BRN.1, -0.04% BRNV20, -0.04%, the global benchmark, was up 11 cents, or 0.2%, at $45.28 a barrel on ICE Futures Europe. WTI and Brent on Wednesday closed at their highest levels since early March.
Initial jobless claims unexpectedly fell by 249,000 in early August to a still eye-watering 1.19 million, and touched the lowest level since the coronavirus pandemic began more than four months ago.
“The U.S. economy seems to be headed in the right direction once again and that should do wonders for crude demand expectations,” said Edward Moya, senior market analyst at Oanda, in a note. “A broad decline in jobless claims should only improve as new virus cases continue to decline and it seems COVID-19 deaths might have peaked.”
WTI and Brent on Wednesday broke out of a longstanding trading range. Both posted their highest settlements since March 6, but ended off session highs even though the Energy Information Administration said U.S. crude stocks fell by a much larger-than-expected 7.4 million barrels in the week ended July 31, while gasoline inventories unexpectedly rose 419,000 barrels. Distillate supplies increased by a much larger-than-expected 1.6 million barrels.
Oil’s gains appear to have been driven by growing hopes Congress and the White House will agree on another round of coronavirus fiscal stimulus, the fall in crude inventories, and the slide in the U.S. dollar, which has traded at more than two-year lows based on the ICE U.S. Dollar Index DXY, -0.19%, said Warren Patterson, head of commodities strategy at ING, in a note.
But the message sent by the rise in product inventories could dampen prospects for further gains, he said, noting that distillate stocks are slightly below 180 million barrels, which is more than 42 million barrels above levels seen this time last year. Meanwhile, implied demand for total products fell by 1.18 million barrels over the week.
“It is difficult to get overly constructive towards the oil market with demand having stalled and this product overhang,” Patterson said.
Natural-gas futures NG.1, -0.68% NGU20, -0.68% were flat at $2.1910 after the EIA said the amount of natural gas in storage in the week ended July 31 rose by 33 billion cubic feet. Analysts surveyed by S&P Global Platts had looked for an injection of 27 billion cubic feet.
September gasoline RBU20, +0.69% was up 1.2% at $1.238 a gallon, while September heating oil HOU20, -0.94% was off 0.8% at $1.2536 a gallon.
