NEW YORK (DTN) -- New York Mercantile Exchange crude oil and ULSD futures moved higher while RBOB eased at the start of regular trading Friday morning, with West Texas Intermediate crude oil consolidating gains over the last three-paper trading session.
The market is recalibrating after the Bureau of Economic Analysis reported a short time ago that the United States’ economy grew by 0.7% in the fourth-quarter of 2015, missing a projected 0.8% rate amid global weakness and turmoil in global markets. In the third quarter, the nation’s gross domestic product grew at 2.0%.
The oil market rallied across the board Thursday after comments about the possibility of a meeting by major oil producers to cut production prompted short covering, and the rally continued into overnight trade through this morning for WTI and ULSD.
The market was also supported by a fresh dose of stimulus measures from Japan, with the Bank of Japan, in an unexpected policy move overnight, saying overnight that it will launch negative interest rates for the first time.
At 8 a.m. CT, NYMEX March WTI crude futures climbed 53 cents to $33.75 barrel after inside trade while ICE March Brent oil futures advanced 53 cents to $34.42 bbl.
In products trade, the NYMEX February ULSD futures contract edged 1.15 cents up to $1.0424 gallon while the February RBOB futures contract eased 0.11 cents to $1.0692 gallon.
On Wall Street, stock indices were higher while the dollar rose to a three-day high versus its peer currencies after the advanced Q4 U.S. GDP report and Japanese stimulus news hit the wire services.
BOJ said it will instead pay 0.10% interest rates to commercial bank excess reserves. Prior to that change banks paid 0.10% rates for the reserve, so this is considered a stimulus move, and it comes after the European Central Bank last week said it might introduce another stimulus measure in March. The U.S. Federal Reserve on Wednesday held interest rates steady.
On supply, Russian oil minister Alexander Novak retracted his earlier comments that the Organization of the Petroleum Exporting Countries would meet with Russia in February to discuss a 5% output cut. The walk-back came after several OPEC delegates refuted his earlier comments, and analysts remained skeptical of the chances of an agreement to cut production.
Novak’s latest comments suggest Russia is trying to nudge OPEC to cut output without committing itself to the move. Both Russia and Saudi Arabia have previously showed disinterest in cutting output since they were trying to maintain or maximize their market share.
The market has a surplus of about 1.5 million barrels per day, according to data from OPEC and the International Energy Agency.
Some of the upside for oil futures was also due to technically-driven short-covering after falling sharply in the past month. "The Russia-OPEC headline is just talking the market up, but it did prompt the shorts to cover," said Houston-based analyst Andy Lipow.
George Orwel can be reached at email@example.com,
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