By Geoffrey Smith
Investing.com -- Crude oil prices reversed overnight gains in early trade in New York on Thursday on fresh signs that the economic recovery is stalling under pressure from the spread of the coronavirus.
Labor Department numbers showed that initial jobless claims rose for the first time since April to 1.416 million, suggesting that the pace of layoffs is picking up again after slowing gradually over the previous three months.
The data followed other data showing a sustained increase in deaths across the U.S. from the Covid-19 virus. The death toll hit 1,100 again on Wednesday.
By 10:55 AM ET (1455 GMT), U.S. crude futures were down 0.6% at $41.64 a barrel, while the international benchmark Brent was down 0.9% at $43.41 a barrel.
Gasoline RBOB futures were down 1.2% at $1.2677 a gallon.
Demand is increasingly the key variable in a market where the supply outlook has become more predictable, with the OPEC+ group of producers still sticking to their output restraint pact.
"We are not there yet in terms of fundamentals for the next leg higher," analysts at Barclays (LON:BARC) said in a note to clients.
Sentiment about the strength of demand has been hurt this week by two sets of figures showing an unexpected rise in U.S. crude stocks, the American Petroleum Institute reporting a 7.5 million-barrel build and the U.S. government suggesting 4.9 million barrels.
Energy Information Administration data released earlier this week showed that supplies of gasoline from U.S. refineries is plateauing more than 15% below pre-Covid 19 levels: throughput fell to 14.20 million barrels a day last week after over two months of steady increases.
To add to the bleak picture, two of the U.S.’s biggest airlines, Southwest and American, both said on Thursday that they will pare their autumn flight schedules given the ongoing weakness in demand for air travel.
Elsewhere on Thursday, newswires reported Kremlin spokesman Dmitry Peskov as confirming that Russia will look at setting up a hedge mechanism for the country’s oil output to ensure more stability in budget revenue. Mexico has operated a similar practise for years, one reason why it didn’t have the flexibility to go along with the output cuts coordinated by Russia and OPEC earlier this year.