Oil futures were up on Thursday, supported by a drop in US unemployment and a drawdown in crude inventories, but the spike in US coronavirus infections fanned concerns that economic activity will weaken in coming weeks.
New Covid-19 cases in the United States rose by nearly 50,000 on Wednesday, according to a Reuters tally, the biggest one-day spike since the start of the pandemic. Numerous states are advising citizens to restrict movements and closing bars and restaurants again, which is expected to hamper further job growth.
Brent crude futures rose 69 cents, or 1.6 per cent, to trade at $42.72 a barrel by 1:25 p.m. EDT (1725 GMT). US West Texas Intermediate (WTI) crude futures gained 49 cents, or 1.2 per cent , to $40.31 a barrel.ALSO READ: Wall Street jumps at open on strong US jobs report; Nasdaq hits record high
“Prices definitely got a boost from the economic data, but I think the reason we’re not getting a more enthusiastic reaction to the upside is because of the concerns about the uptick of the virus,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
US non-farm payrolls increased by 4.8 million in June, the Labor Department reported, beating expectations, even as permanent job losses rose. Traders said the data could lessen the desire in Washington for more federal support for the economy. “The jobs report was good, but the flip side of that was that it was so good that it might inhibit a stimulus program,” said Bob Yawger, director of energy futures at Mizuho.
US crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, US Energy Information Administration data showed, as refiners ramped up production and imports eased. [EIA/S]
Gasoline stockpiles were higher, however, and the spike in cases in heavily populated US Sun Belt states, among the country’s biggest consumers of gasoline, could hit fuel demand headed into the July 4 holiday weekend, often a busy period for road travel.