DTN Oil
Oil Ekes Out Gain as Jobless Claims Lift Odds for Rate Cut
CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent on the Intercontinental Exchange notched gains on Thursday on improving expectations for lower interest rates following a jump in initial filings for unemployment insurance.
June RBOB futures rallied to a $2.5655 gallon intraday high following the release of the first-time claim filings by the Labor Department Thursday morning, which rose 22,000 to 231,000 during the week ended May 4.
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Job losses are typically bearish for gasoline demand, weighing on consumer sentiment and discretionary spending. However, the market looked at today's report as a sign of a softening economy that would lead to lower interest rates after data released in April showed expanding inflationary pressure, diminishing the likelihood of rate cuts. Those factors weighed on consumer sentiment in April, with gasoline supplied to the U.S. market during the four weeks ended May 4 down 363,000 barrels per day (bpd) or 4% at 8.625 million bpd against the comparable year-ago period, according to data from the Energy Information Administration.
June RBOB futures reversed higher from Wednesday's $2.4826 10-week low on the spot continuation chart to settle $0.01 higher at $2.5418 gallon.
June ULSD futures firmed, inching 15 points higher to a $2.4776 gallon settlement. While up modestly, it was the fifth consecutive positive close for the diesel contract, edging higher after testing technical support at the trendline for the downtrend from the April 2022 high now at $2.3920 gallon.
The U.S. dollar weakened with the boost in unemployment filings, settling down 0.3% at 105.104 in index trade against a basket of foreign currencies, with the CME FedWatch Tool showing a 60% probability the federal funds rate will end the year at 5% or less. Currently, the policy rate is in a 5.25% by 5.5% target range.
The weaker dollar lent upside support for June West Texas Intermediate futures, which settled $0.27 higher at $79.26 a barrel (bbl), paring gains after testing resistance at the $79.54 50% Fibonacci retracement point for the February-April uptrend.
July Brent futures settled $0.30 higher at $83.88 bbl after finding technical support at the $83.42 50-day moving average.
Brian L. Milne can be reached at brian.milne@dtn.com.