By Geoffrey Smith
Investing.com -- Crude oil prices were lower in early trade in New York on Thursday, with selling gathering pace after a surprise increase in U.S. initial jobless claims that suggested continued pressure on local oil demand.
Initial jobless claims rose for the first time since the end of March, to over 1.1 million, with another half a million making initial claims for Pandemic Unemployment Assistance.
As the latter program has been sharply cut since the start of the month, such increases are likelier to pass through into demand than earlier in the summer, when a more generous support regime kept consumer incomes largely intact.
By 9:15 AM ET (1315 GMT), U.S. crude oil futures were down 2.2% at $42.16 a barrel, while the global benchmark Brent was down 0.9% at $44.51 a barrel. Both markers were down around 50 cents from before the jobless claims release.
Gasoline RBOB futures were down 2.5% at $1.2588 a gallon.
The Energy Information Administration’s weekly report on oil stocks on Wednesday had reinforced the impression that U.S. products consumption has stalled, with levels of gasoline and diesel consumption still more than 10% below year-earlier levels and supplies of jet fuel down nearly 50%.
Some analysts are now calling at least a short-term top in prices, as Labor Day and the end of the summer driving season approach.
“We never really got the demand strength we expected this summer, which in refining terms is now over,” said Sankey Research’s Paul Sankey in a morning note. “Next year post-election we should get the strong demand we mis-forecast for this summer.”
Elsewhere, a Reuters report indicated that the risk of oversupply on the global market is still alive. It cited an OPEC documents showing that countries who had signed up to the OPEC+ pact on cutting output had oversupplied by an average of 2.3 million barrels a day between May and July. Iraq was the biggest culprit, but Russia and Kazakhstan together overproduced by nearly half a million barrels a day on average.
"The Committee emphasized that achieving 100% conformity from all participating countries in the DoC and compensating for the shortfalls in May, June and July 2020 is not only fair, but vital for the ongoing rebalancing efforts and to help deliver long-term oil market stability," OPEC had argued, pointing to ongoing tension within the group.
A meeting of ministers to review the pact on Wednesday had, however, concluded that no change from the current schedule on output was necessary.