Oil Price Fundamental Daily Forecast – Rising U.S. Initial Claims Could Weaken Future Demand

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed higher on Thursday at the end of the holiday shortened week, supported by a decline in the U.S. unemployment rate and a larger-than-expected drawdown in crude inventories earlier in the week.

However, gains were capped and there was an air of caution ahead of the long holiday weekend as a resurgence in U.S. coronavirus infections fanned concerns that economic activity will weaken in coming weeks.

On Thursday, August WTI crude oil futures settled at $40.65, up $0.83 or -2.08% and September Brent crude oil finished at $43.14, up $1.11 or +2.57%.

U.S. Non-Farm Payrolls Report

The Labor Department on Thursday reported U.S. non-farm jobs increased by 4.8 million in June, far better than the 2.9 million jump economists polled by Dow Jones had been expecting.

Crude oil investors also applauded a decline in the national unemployment rate, which dropped to 11.1% from 13.3% in May.

Weekly Jobless Claims

In a separate report, the Labor Department said Thursday that initial jobless claims rose by 1.427 million. The print marked the 15^th straight week in which initial claims remained above 1 million and came in higher than expected by economists.

The data also showed the number of continuing claims – the number of people receiving unemployment benefits for consecutive weeks – rose to 19.29 million, an increase of about 59,000.

Baker Hughes Announces June 2020 Rig Counts

Baker Hughes announced on Thursday that the international rig count for June 2020 was 781, down 24 from the 805 counted in May 2020, and down 357 from the 1,138 counted in June 2019.

The international offshore rig count for June 2020 was 194, down 1 from the 195 counted in May 2020, and down 52 from the 246 counted in June 2019.

The average U.S. rig count for June 2020 was 274, down 74 from the 348 counted in May 2020, and down 695 from the 969 counted in June 2019. The average Canadian rig count for June 2020 was 18, down 5 from the 23 counted in May 2020, and down 96 from the 114 counted in June 2019.

The worldwide rig count for June 2020 was 1,073, down 103 from the 1,176 counted in May 2020, and down 1.148 from the 2,221 counted in June 2019.

Short-Term Outlook

Given the rise in the number of COVID-19 infections in the United States and the implementation of new restrictions and lockdowns, the June Non-Farm Payrolls report may be the best we’ll see for a while. This could mean more pain for crude oil traders as fuel demand could weaken.

This is just one of the factors that could generate a bearish influence on the markets next week.

Next week’s initial claims report should be a major event for crude oil traders.