By Geoffrey Smith
Investing.com -- Crude oil prices weakened in early trade in New York on Thursday after data showed the rebound in the labor market levelling off, casting fresh doubt over the trajectory of U.S. fuel demand.
They remained toward the higher end of their recent range, however, underpinned by a drop of nearly 7.5 million barrels in U.S. crude inventories last week, the biggest weekly drop in more than six months.
By 9:15 AM ET (1315 GMT), U.S. crude futures were down 1.0% at $40.77 a barrel, while the international benchmark blend Brent was down 0.7% at $43.48 a barrel. RBOB gasoline futures were down 1.3% at $1.2486 a gallon.
The market had struggled for direction overnight, after absorbing the news of the OPEC+ decision to return some 2 million barrels a day in supply to world markets from August (that actual increase will be lower due to higher domestic consumption in Saudi Arabia and further cuts by some OPEC+ members to compensate for past over-production).
However, benchmark futures prices fell after the U.S. labor department said initial jobless claims edged down by only 10,000 to 1.30 million last week. Economists had expected a drop of 60,000.
The news overshadowed the announcement that U.S. retail sales rose by 7.5% in June, more than the 5.0% gain expected.
The data come against backdrop of still-rising rates of new infections, hospitalization and deaths across the south and west of the U.S., regions that are home to over half of the country’s population. California, Arizona, Florida and Texas alone reported another 36,000 new cases on Wednesday, along with 450 deaths.
The second wave of infections has already led to the reversal of some economic reopening measures in various states.
“The state of the economy really begins and ends right now with the virus and how the virus is being contained and controlled, or not,” the Wall Street Journal quoted Philadelphia Federal Reserve President Patrick Harker as saying in an interview.
Nonetheless, many countries around the world continue to report an uninterrupted rebound in demand so far. U.K. road fuel sales for last week were only 20% below pre-pandemic levels, according to data released on Thursday. That’s an improvement from a 70% decline at the depths of the pandemic in April.