Oil Futures Inch Higher Thursday

Oil Futures Inch Higher Thursday

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange edged higher in market-on-close trade Thursday, lifted by rallying equities worldwide after China's Central Bank announced a new policy of monetary easing this year to reinvigorate growth in the world's second-largest economy.

Strengthening U.S. dollar, which reversed off a six-month 96.020 low traded New Year's Eve, capped gains for West Texas Intermediate futures throughout the trading session. The dollar index measures the greenback's performance against six other major currencies ended up 0.5% at 96.525.

At settlement, February WTI contract edged up $0.12 to $61.18 per barrel (bbl), and ICE March Brent gained $0.25 at $66.25 per bbl. NYMEX February ULSD futures moved up 0.13 cent to settle at $2.0241 gallon, with the NYMEX February RBOB contract rallied 1.37 cents to $1.7042.

Oil futures extended gains into the New Year after China announced it would boost supply of cheap money in 2020 through lowering the amount of cash reserves that lenders must have on hand. Furthermore, Chinese Central Bank indicated it will take certain action to reduce corporate borrowing costs starting in mid-January. Both actions are intended to spur growth in the second largest economy above 6% -- the new target for the Chinese government. China's financial markets rallied on Thursday, spurring gains across European and U.S. equities. Dow Jones Industrial Average added more than 330 points to 28,869, with S&P 500 and NASDAQ also tested new highs in trading Thursday.

The Federal Reserve will release minutes from its December meeting Friday afternoon, with the market to look for signs of dissent in the Fed's outlook for keeping rates on hold in 2020. The central bank held its benchmark interest rate steady last month at 1.5% to 1.75% after three cuts earlier in the year that helped rally markets in 2019.

U.S. manufacturing index posted a slight improvement from last month to 52.5 in December's final reading, which was also in line with market expectations. Eurozone economies also reported a modest uptick in their manufacturing activity to a 46.3 reading in December -- although still deep in contraction territory. Germany remained the weakest-performing economy, with the national PMI dipping to 43.7, from 44.1 for the month before.

In China, Caixin PMI index came at 51.5 reading in December, in line with market expectations.

A recent cooling of trade-related tensions between the United States and China, following a limited trade agreement reached last month has also lent support to the oil complex. Both Washington and Beijing have agreed to sign a trade deal on Jan. 15 at a White House ceremony.

Thursday afternoon, traders also await the holiday-delayed release of official supply statistics on last week's change in U.S. crude and petroleum supply due out 11 a.m. EST Friday.

American Petroleum Institute reported earlier this week U.S. commercial crude supplies fell 7.8 million bbl during the week-ended Dec. 27, nearly double estimates for a 3.1-million-bbl decline. Crude stocks at the Cushing supply hub in Oklahoma were drawn down 1.4 million bbl. API said gasoline stocks declined 776,000 bbl, contrasting with estimates for a 3.7 million bbl build, and distillate fuel supply increased 2.8 million bbl during the week reviewed which was less than an expected 3.2-million-bbl draw.

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


Liubov Georges