By Geoffrey Smith
Investing.com -- Crude oil prices drifted lower in early trading in New York on Monday, consolidating recent gains after another weak set of labor market data from the U.S. casting a question mark over the path of U.S. demand in the near term.
By 11 AM ET (1600 GMT), U.S. crude futures were down 0.4% at $52.69 a barrel, while Brent crude futures were down 0.9% at $55.55 a barrel.
U.S. Gasoline RBOB Futures, which hit an 11-month high of $1.5766 a gallon earlier this week, were down 1.2% at $1.5300 a gallon.
Earlier, the U.S. Labor Department had said nearly 1 million Americans had filed initial claims for jobless benefits last week, reviving concerns about labor market weakness as an increasing number of bars and restaurants go under due to the pressures of the pandemic. Meanwhile, Bloomberg reported that road use in four big economies of Europe, where lockdown measures have been stricter and broader, was down 37% year-on-year in the first week of 2021, underlining the fact that shortfalls in demand for refined product aren't limited to jet fuel.
Traders can’t be ignoring bearish pandemic signals forever," said Bjornar Tonhaugen, head of oil market research at Rystad Energy, in e-mailed comments, adding that the market was due for a correction. "Vaccination campaigns may be under way but until big words are turned into actions and large parts of the global population are immunized, it will take a while until demand benefits ...The truth is that the market is optimistic, but this optimism leads it to hanging on bullish signals to a larger extent than it should."
Tonhaugen said that prices should still be well supported at $50 for the foreseeable future, but said any gains beyond that will depend on "infection levels and demand signals."
For now, however, the signs are that output discipline by OPEC and its allies is still helping to rebalance the market. OPEC's monthly report published earlier on Thursday indicated that global oil stocks were now only 163 million barrels above their five-year average, which is the level used by the bloc as its benchmark. Right now, OPEC is pumping some 1.8 million barrels a day less than it expects to need to pump this year to keep the market balanced, leading to a gradual whittling down of those inventories - as evidenced by two bullish inventory reports from the U.S. this week.
OPEC left its forecast for global demand this year more or less unchanged at 95.9 million barrels a day.