DTN Oil

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange (NYMEX) and Brent crude traded on the Intercontinental Exchange settled Thursday's session mixed as the U.S. dollar retreated and stocks on Wall Street rose to all-time highs ahead of Friday's employment report. Investors are betting the Federal Reserve will begin cutting interest rates as early as June.

The U.S. dollar extended losses into the fifth consecutive session on Thursday, having lost 0.45% against a basket of foreign currencies as market participants balanced weaker-than-expected U.S. economic data against dovish comments from the Fed's Chairman Jerome Powell.

"If the economy does as expected, we will think carefully about removing the restrictive policy stance over the course of this year. I am waiting to be more confident; we are not far from it," noted Powell at the hearing in front of the Senate Banking Committee.

He further noted the number of rate cuts will depend on the development of the economy, recalling that the Fed's latest projections indicate a median preference for three rate cuts in 2024.

So far, macroeconomic data for the January-February period came in on the softer side with business activity in both manufacturing and services slowing at a faster rate under pressure from high interest rates.

Investors will next shift focus to Friday's Non-Farm Employment report, scheduled for 7:30 a.m. CST release, with economists anticipating 190,000 new jobs added in February, down from January's robust addition of 353,000 jobs. Analysts attribute the anticipated deceleration to seasonal adjustments and an uptick in jobless claims.

As a precursor to the Non-Farm Employment report, the Automatic Data Processing (ADP) data released earlier this week showed softer-than-expected private employment growth. In February, private employers added 140,000 jobs, a figure that fell short of the anticipated 150,000 mark.

Thursday's mixed settlements also follow a bullish inventory report from the U.S. Energy Information Administration, showing total U.S. commercial petroleum stocks declined by 5.5 million barrels (bbl) last week as demand for refined fuels rebounded sharply, suggesting driving and industrial activity is picking up momentum into the spring months. U.S. gasoline consumption jumped by 546,000 barrels per day (bpd) from the previous week to 9.013 million bpd -- the highest levels since mid-December 2023, which marked one of the busiest holiday travel seasons. The Federal Reserve Bank of St. Louis estimates the 12-month moving average of total vehicle miles traveled in the U.S. in December 2023 nearly matched pre-pandemic levels.

For distillate fuel oil, consumption also rose above 4 million bpd for the first time this year, up by 538,000 bpd from the previous week's average. On a four-week average level, U.S. distillate demand has fallen in line with year-ago levels but remains 14.4% below 2022 levels for the seasonal period and 7% below 2019 levels.

Commercial crude oil stockpiles increased for the sixth consecutive week through March 1, up 1.4 million bbl from the previous week to 448.5 million bbl. U.S. refinery inputs averaged 15.3 million bpd last week, which was 595,000 bpd more than the previous week's average. Domestic refiners raised run rates 3.4% in the reviewed week to 84.9% of capacity compared with expectations for a 1% gain.

Domestic crude oil production unexpectedly decreased by 100,000 bpd from a record high 13.3 million bpd, lending further price support for the oil complex.

At settlement, West Texas Intermediate April futures on NYMEX eased $0.20 to $78.93 bbl and the international crude benchmark Brent for May delivery settled unchanged at $82.96 bbl. NYMEX April RBOB futures settled modestly higher at $2.5548 gallon, and April ULSD futures advanced $0.0258 for a $2.6891 gallon.

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