DTN Oil

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange powered higher in the afternoon session Thursday boosted by a strong pace of U.S. crude oil exports in recent weeks. Risk-on sentiment in global equities following Nvidia's skyrocketing earnings and strong guidance for the first quarter further spurred gains across commodity markets.

Today's inventory report from the U.S. Energy Information Administration (EIA) was mixed for the oil complex, showing commercial oil supplies increased for the fourth consecutive week through Feb. 16 as domestic refineries struggle to raise runs due to heavy seasonal maintenance and unplanned outages. U.S. refineries processed 14.6 million barrels per day (bpd) last week, which was 436,000 bpd or 2.6% below the 2023 processing rate. Nationwide, refinery run rates averaged 80.6% of capacity last week, a nearly 10-month low, with PADD 1 East Coast operators reducing utilization 1.8% to 79.7% and PADD 3 Gulf Coast refiners continuing to operate at a reduced 79.8% of capacity.

Offsetting weakness in domestic refinery runs, U.S. crude exports surged to nearly 5 million bpd, up 653,000 bpd from the previous week, according to the EIA report. On a four-week basis, exports broke above 4.2 million bpd, nearly 700,000 bpd higher year-on-year. Strength in crude exports helped to limit builds in domestic crude stocks.

Further spurring gains for West Texas Intermediate (WTI), U.S. dollar retreated against global peers and stocks on Wall Street rallied after Nvidia, the manufacturer of high-end chips used in artificial intelligence (AI) applications, reported $22.1 billion revenue for fourth quarter 2023, up 265% from a year earlier.

"Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries, and nations," said Jensen Huang, founder, and CEO of NVIDIA during the earnings call.

Underlying optimism around AI technology are the expectations of accelerated productivity growth across various sectors of the economy, including transportation, health care and financial services. Productivity growth in the U.S. started to pick up last year after decades of stagnation driven, in part, by the adoption of AI technologies. Although still in very early stages, generative AI is expected to raise U.S. labor productivity by roughly 1.5% per year over the next decade, according to Goldman Sachs analysts.

"If we keep on getting strong quantity numbers, like jobs numbers, GDP number, while inflation goes down, we have to entertain the possibility that we are entering a period like the 1990s when we had productivity growth faster than trend and that opens up some new possibility for the monetary policy," said Chicago Federal Reserve President Austan Goolsbee during a Feb. 5 interview with Bloomberg's Mike McKee.

So far, Federal Open Market Committee (FONC) members are biased towards a gradual and cautious approach when considering a pivot towards a rate-cutting cycle, according to minutes from the FOMC's Jan. 30-31 meeting. At the meeting, FOMC decided to leave the federal funds rate unchanged in a 5.25% to 5.5% target range but signaled it could soon start discussions on when the timing would be appropriate to cut the key interest rate.

On the session, the U.S. dollar index retreated 0.036% against a basket of foreign currencies to settle the session at 103.875 as investors piled into riskier assets. The S&P 500 gained 2.11% and the Nasdaq Composite advanced 2.96% for its best day since February 2023. The Dow Jones Industrial Average surged 456.87 points, or 1.18%, to surpass 39,000 for the first time on record.

Front-month April WTI futures on NYMEX advanced $0.70 to settle at $78.61 bbl. The international crude benchmark ICE April Brent futures contract added $0.64 to $83.67 bbl. NYMEX March RBOB futures rallied $0.0487 to $2.3347 gallon, while NYMEX March ULSD futures moved $0.0468 higher to $2.7520 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com.