WTI Futures Fade From 5Mos. High ahead of Key US Jobs Data


   
    

    

   WASHINGTON, D.C. (DTN) -- Heading into early trading Thursday, oil futures 
on the New York Mercantile Exchange and Brent crude on the Intercontinental 
Exchange moved mixed, with the West Texas Intermediate September contract 
backing off a five-months high as investors weighed a weaker-than-expected 
reading on U.S. private sector jobs against otherwise solid gains in overall 
economic activity, putting renewed focus on today's weekly unemployment claims 
and Friday's non-farm payroll report.

   U.S. jobless claims slated for release at 8:30 AM ET by the Department of 
Labor is expected to show a third consecutive weekly increase in first-time 
applications for unemployment benefits through Aug. 1. Analysts forecast an 
increase to 1.442 million new claims in the reviewed week. The trend in labor 
market reversed sideways in the most recent weeks as coronavirus cases flared 
up in several U.S. states, causing renewed business shutdowns and pausing 
re-opening plans. Weekly unemployment figures follow a bearish reading from 
private payroll provider ADP, showing a mere 162,000 new jobs were added by the 
private sector last month, with all but 1,000 of those jobs coming from the 
service sector. Details of the report show professional and business services 
led the gains with 58,000 new jobs, followed by education and health services 
at 46,000 while trade, transportation and utilities contributed 41,000 jobs.

   On Friday, the Bureau of Labor Statistics' U.S. non-farm payroll report is 
forecast to show a gain of 2 million jobs in July, a sizable decrease from 4.8 
million new positions created in June. Any reading below 2 million would be 
seen as bearish for oil markets, with labor participation key to sustained 
recovery in oil demand.

   Otherwise, economic activity in the U.S. service sector expanded at a robust 
pace in July with the Institute for Supply Management's non-manufacturing PMI 
rising to a score of 58.1%. The new reading beat market expectations of 55%. 
Further details of the report, however, revealed Employment Index edged lower 
from 43.1 to 42.1, indicating private business hire less than in a prior month.

   Near 7:30 AM ET, the front-month WTI contract dropped 43cts to below $42 bbl 
and international Brent crude slipped 17cts to trade at $45 bbl. NYMEX ULSD 
September futures traded 0.57cts lower at $1.2580 gallon and front-month RBOB 
futures added 0.56cts to $1.2282 gallon.

    

    

   Liubov Georges, 1.646.359.4088, Liubov.georges@dtn.com, http://www.dtn.com.




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