NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Tuesday afternoon amid consolidation after selling off on Monday, with the complex off earlier highs as the dollar strengthened following hawkish comments from Federal Reserve Chair Janet Yellen.
During Congressional testimony, Yellen said that U.S. economic growth is expected to continue at a moderate pace as inflation and wage growth picks up, two data points suggesting the central bank could raise interest rates steadily throughout the year.
"The [oil] market is rebounding off support, but [Fed Chair Janet] Yellen's hawkish comments caused the dollar to rally to a near four-week high and crude futures pared gains," said analyst Phil Flynn at Price Futures. "There's now a hesitancy to move higher, so the market is range-bound until we get inventory data."
NYMEX March West Texas Intermediate futures settled 27cts higher at $53.20 bbl and the IntercontinentalExchange April Brent crude futures gained 38cts to $53.71 bbl settlement.
NYMEX March RBOB futures added 0.21cts to settle at $1.5467 gallon and the NYMEX March ULSD contract rose 1.09cts to $1.6382 gallon settlement.
The market now awaits weekly oil supply data set for release at 4:30 PM ET by the American Petroleum Institute and at 10:30 AM ET Wednesday by the Energy Information Administration.
A Schneider Electric survey shows domestic crude oil inventories are expected to have increased by 4.0 million bbl during the week-ended Feb. 10, with distillate supplies seen drawn down by 1.2 million bbl and gasoline projected to have declined by 700,000 bbl.
Today's advance was lent support by another look at Monday's monthly outlook by the Organization of Petroleum Exporting Countries that detailed a sharp decline in OPEC production and showed cartel members were largely putting into effect production cuts they agreed to late last year that took effect on Jan. 1.
OPEC also revised up its demand outlook, saying global oil demand is seen at 95.81 million bpd this year for annual growth of 1.19 million bpd following an upward revision of 35,000 bpd. OPEC sees demand for its crude this year at 32.1 million bpd, up roughly 800,000 bpd from 2016.
"Fundamentals are getting better, with demand growth higher and OPEC complying with its pledge to cut output," said Flynn.
OPEC crude oil production fell by 890,000 bpd in January to 32.14 million bpd versus December, reflecting 74% compliance with the 1.2 million bpd in production cuts the oil cartel agreed to on Nov. 30, 2016, according to the OPEC report, which contrasts with a 90% OPEC compliance rate reported last week by the International Energy Agency.
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