DTN Oil Update
Oil Futures Soared Due to Stricter Sanctions on Russia
HOUSTON (DTN) -- Oil futures rallied to close the week on Friday and hit a new six-month high, amid news of stricter sanctions from the U.S. on Russian oil trade and on better-than-expected U.S. employment data.
The front-month NYMEX WTI futures contract rose by $2.69 to $76.61 bbl while the February ICE Brent futures contract jumped by $2.80 to $79.72 bbl. The front-month RBOB futures contract edged up by $0.0457 to $2.0740 gallon and the ULSD futures contract for February delivery rose by $0.1204 to $2.4986 gallon.
The U.S. dollar index rose by 0.52% to 109.520 against a basket of foreign currencies.
Oil futures prices soared following the announcement of additional U.S. sanctions on Russian oil, targeting 183 oil tankers from a shadow fleet, two Russian gas producers, traders and ports, and others. The sanctions will take effect on Feb. 27.
Supply tightness in the global oil market is expected due to these sanctions, coupled with declining U.S. crude inventories recently reported.
Better-than-expected U.S. jobs data reported by the Bureau of Labor Statistics today contributed to the bullish sentiment in the oil futures markets.
Total nonfarm payroll employment increased by 256,000 in December, compared to 227,000 recorded in November. The figure surpassed market expectations, which ranged from 125,000 to 200,000. The unemployment rate stood at 4.1%, below the market forecast of 4.2%.
Due to the strong nonfarm payroll number, analysts expect the Federal Reserve will delay its decision to cut interest rates until the second half of the year, rather than in March when the Federal Open Market Committee is scheduled to meet.
On production, Kinder Morgan's SFPP West and CALNEV pipelines have returned to service, according to a statement emailed to DTN this morning.
The lines were shut mid-week due to power outages as a result of the multiple, devastating wildfires. KM's SFPP West Line is nearly 515 miles of primary pipeline and currently transports products from the Los Angeles Basin to Colton and Imperial, Calif., and Phoenix, Ariz.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
