Oil Futures Wobble on Weak Fuel Demand, USD Resume Gains
1/13 3:49 PM
Oil Futures Wobble on Weak Fuel Demand, USD Resume Gains WASHINGTON, D.C. (DTN) -- Crude and refined products futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange wobbled in afternoon trade Wednesday, with prompt-month West Texas Intermediate pausing a six-session rally after government data showed demand for motor gasoline stalled near a seven-month low and product supplies surged by a combined 9.4 million bbl during the week-ended Jan. 8, indicating protracted weakness in the complex. Energy Information Administration data released midmorning showed gasoline supplied to the U.S. market, a measure for demand, stalled at 7.532 million bpd during the week-ended Jan. 8 -- up 91,000 bpd from the prior week which was the lowest weekly demand rate since the lifting of a nationwide lockdown in late May. Four-week average consumption remained about 11% below the same period last year. Sluggish fuel demand accompanied a large weekly build in both gasoline and distillate inventories that surged a whopping 9.2 million bbl. That suggest that while Saudi Arabia and OPEC+ partners may be committed to destocking global fuel inventories near-term demand issues will continue to be a bearish drag on the market. On the session, NYMEX WTI for February delivery slipped below $53 bbl to finish at $52.91 bbl and March Brent contract declined a steeper 52cts to $56.06 bbl. NYMEX February ULSD futures edged 0.22cts higher to settle at $1.5989 gallon, with the front-month RBOB futures were down 0.42cts for a $1.5488 gallon settlement. U.S. dollar continued higher in afternoon index trade to finish at 90.334, further pressuring the front-month WTI contact. In financial markets, major indexes posted mixed results as investors watched unfolding events in Washington, D.C., where the U.S. House of Representatives launched a second round of impeachment proceedings against President Donald J. Trump. More than 20,000 National Guard troops were deployed throughout the capitol to guarantee security ahead of the Jan. 20th inauguration for President-elect Joe Biden, said city's police chief Robert J. Contee III. Also, on Wednesday, U.S. Federal Reserve released its latest Beige Book report where the central bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts. Fed officials estimate the U.S. economy grew "modestly" in the final weeks of 2020, with nearly one-third of districts reporting flat or declining activity amid resurgent COVID-19 infections and targeted lockdowns. Some districts reported declining retail sales -- an unusual trend for the end of year holiday season. A growing number of districts reported a drop in employment over the last two months of 2020. Earlier this month, U.S. Department of Labor reported negative job growth for the first time since April, with a majority of losses concentered in the leisure and hospitality sector. Furthermore, inflation appears to be a growing issue for a number Federal Reserve officials. "No matter what theory of inflation you subscribe to, they all are pointing in the direction, toward an increase," said St. Louis Federal Reserve Bank President James B. Bullard today. This morning, the U.S. Bureau of Labor Statistics reported the consumer price index, a measure of inflation, increased 0.2% in December from November while up 1.4% against year ago, with lower energy costs offsetting increasing food inflation. Liubov Georges, 1.646.359.4088, liubov.georges@dtn.com, http://www.dtn.com. (c) Copyright 2021 DTN, LLC. All rights reserved.