U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading nearly flat at the mid-session in a mostly lackluster trade on Thursday. The markets showed little reaction to the better-than-expected U.S. Non-Farm Payrolls and Factory Orders report. Perhaps putting a lid on prices was a higher-than-expected weekly initial claims report.
Drop in Supply Underpins Prices
Helping to underpin crude oil prices this week were a pair of bullish reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA).
The API reported on Tuesday a major draw in crude oil inventories of 8.156 million barrels for the week-ending June 26. Analysts had predicted an inventory draw of 710,000 barrels.
The API also reported a draw of 2.459 million barrels of gasoline for the week-ending June 26. Analysts were looking for a 1.583-million barrel draw for the week. Distillate inventories were up by 2.638-million barrels for the week, while Cushing inventories saw a build of 164,000 barrels.
The EIA reported Wednesday that U.S. crude inventories fell by 7.2 million barrels for the week-ended June 26. That followed three consecutive weeks of increases. Analysts polled by S&P Global Platts had forecast an average crude supply decline of 2.7 million barrels. The EIA data also showed crude stocks at the Cushing, Oklahoma storage hub edged down by about 200,000 barrels for the week.
The EIA also said gasoline supply rose by 1.2 million barrels, while distillate stockpiles fell by 600,000 barrels last week. Traders were looking for a supply decline of 2.7 million barrels for gasoline and an increase of 900,000 barrels for distillate inventories.
U.S. Factory Orders Rebound in May
Crude oil traders are very concerned with demand-side factors revolving around COVID-19 and risks over another round of lockdowns, which raised the importance of today’s U.S. Factory Orders report.
New orders for U.S.-made goods rebounded in May, suggesting a turnaround in manufacturing, though business spending will likely contract again in the second quarter amid cheaper crude oil as the COVID-19 pandemic depressed global growth.
The Commerce Department said on Thursday factory orders increased 8.0% after falling 13.5% in April. Economists polled by Reuters had forecast factory orders increasing 8.9% in May.
Factory orders dropped 10.3% year-on-year in May. Manufacturing, which accounts for 11% of U.S. economic activity, appears to be regaining its footing, but a resurgence in coronavirus cases amid the reopening of business threatens the budding recovery.
The price action on Thursday suggests traders weren’t too happy with jobs data on Thursday. They probably had no problem with a jump in non-farm payrolls, but this is old news. The weekly unemployment claims report was a little bearish and it suggests the number of claims could go up over the near-term if states continue to shutdown their economies. This could weigh on demand for gasoline and distillates.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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