Brent futures rose 21 cents, or 0.5%, to $43.52 a barrel by 4:46 am GMT, while WTI futures rose by 12 cents, or 0.3%, to $41.19.
US Labor Department data released on July 23 showed weekly unemployment claims rising by 109,000 to 1.4 million in the week ended July 18, higher than the market estimates of 1.3 million. Initial claims rose for the first time in nearly four months after states halted or reversed reopening plans amid a surge in coronavirus cases nationwide. US Treasury Secretary Steven Mnuchin said on July 23 that a Republican plan to extend enhanced unemployment benefits would be based on a 70% wage replace scheme.
Furthermore, daily worldwide infections have also shot back up to a new one-day high of 278,900 for July 22, reversing a five-day consecutive decline in daily cases. Global COVID-19 cases now stand at 15.4 million, with total deaths at 631,000according to data from John Hopkins University.
Bigger than expected jobless claims and a surge in the number of coronavirus cases mean that the outlook for crude oil demand in the US is deep into bear territory. Meanwhile, in South Korea, data showed the nation’s economy sliding into a recession, while in China, severe flooding may reduce the nation’s demand for gasoline and gasoil by as much as 5%, according to Facts Global Energy. The outlook for demand isn’t much better in Europe either, with Finnish refiner Neste Oyj predicting demand for oil products will remain severely reduced in the third quarter.
Furthermore, along the Eastern Chinese coast congestions in oil ports are adding to costs for shippers and importers even as fuel demand stalls. Only the positive news on progress toward a COVID -19 vaccine may be helping investors remain focused on the longer-term rebalancing, preventing the market from dipping further.
On the supply side, US oil rig count rose by 4 to 206 on the week, rig data provider Enverus, an energy data company. This is the third consecutive week that oil rig counts have increased, after a 10-rig gain the previous week and one rig the week before that.