DTN Oil Update
WTI at $62, USD Hits 4-Year Low; NatGas Dips as Storm Eases
SECAUCUS, NJ (DTN) -- Crude futures jumped 3% Tuesday as a four-year low in the dollar drove energy markets, other than natural gas, higher. Geopolitical tensions also boosted oil as U.S. President Donald Trump pressed Iran for a nuclear disarmament deal while a fleet of U.S. warships sat in Middle East waters.
The U.S. Dollar Index sank to 95.97 against a basket of currencies, its lowest since February 2022, ahead of the Federal Reserve's decision on U.S. interest rates due after a two-day policy meeting that ends Wednesday.
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While some on Wall Street anticipate that the Fed might deliver a 25-basis point cut for a fourth consecutive time since September, the broad expectation is for the central bank to leave rates unchanged in a 3.5%–3.75% range.
President Trump said he understood Iran was prepared to make a nuclear deal with the White House as a U.S. Navy armada resided in the Middle East. Tehran said it welcomed talks but was also prepared for war in the event of a U.S. strike.
WTI crude futures for March delivery settled up $1.76, or 2.9%, at $62.39 bbl, while ICE Brent crude for March delivery closed up $1.98, or 3%, at $67.57 bbl.
Among refined products, NYMEX RBOB futures for February rose $0.0425 to $1.8626 gallon. Front month ULSD futures were up $0.0727 to $2.6407 gallon, after hitting a seven-month high of $2.6482 earlier in the session.
Natural gas retreated from Monday's peaks after the worst of the weekend's Winter Storm, although frigid temperatures remained in the Northeast to Mid-Atlantic, keeping intact demand for heating oil, a proxy for ULSD. Natural gas for March delivery fell $0.093 to $3.805 MMBtu after the prior session's one-week high of $3.997.
U.S. crude output and inventories of oil to fuel could see untoward moves in the coming weeks from production shut-ins and the impact to refineries from Storm Fern. Analysts at Energy Aspects estimate that 1.5 million bpd of Permian output was sidelined by the storm.
The American Petroleum Institute will release after 4:30 p.m. EST today inventory data for the week ended Jan. 23. The Energy Information Administration will report numbers for the same period at 10:30 a.m. EST on Wednesday.
Swings in API and EIA data in the aftermath of Storm Fern could cause a recalibration of oil supply demand in the near term. However, the larger focus will be on global oversupply, particularly as Kazakhstan has returned to full production after earlier outages.