WASHINGTON (DTN) -- Fading from intra-session highs, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled shallowly mixed on Friday. Weakness developed in NYMEX RBOB futures after data showing U.S. consumer sentiment and industrial production eased last month, while a sharp increase in domestic drilling rigs also weighed on the complex.
Baker Hughes reported the number of oil rigs deployed in the United States increased for the first time in four weeks through Friday, up 14 to 673, a fresh three-week high. Earlier this week, the Energy Information Administration forecast domestic crude production to reach a new record-high 13.3 million barrels per day (bpd) this year, weighing on the market that is already seeing oversupply in the current quarter.
Oil futures began drifting lower after key U.S. economic indicators came on the lower end of market expectations Friday, showing continued weakness in manufacturing production and slight decrease in consumers' outlook. Federal Reserve reported industrial output fell 0.3% in December after declining for three out of the last four months. In the fourth quarter as a whole, industrial production contracted at the rate of 0.5% -- that is 2.8 percentage points below its long-run (1972-2018) average.
Furthermore, new job openings declined sharply in November, down 10.8% from a year ago, the Labor Department said on Friday. That marked the sixth straight month of annual declines and was the steepest fall since December 2009, when openings dropped 18.7% from a year earlier.
Despite some upbeat news around trade deals, U.S. consumers reported no meaningful uptick in their expectations for the economy's performance at the start of the year. In fact, consumer's sentiment index modestly declined in January.
Oil investors pay close attention to these indicators, as they might give some clues on sagging demand for fuels in the world's largest economy.
Wednesday's inventory report rattled the markets after detailing an oversized 14.5 million barrel (bbl) increase in U.S. total distillate and gasoline stocks after a build of similar size was reported a week prior. Analysts point that gasoline stockpiles have never been this high so early in the year, are already 3 million bbl above last year and far ahead of the 10-year average.
Still, oil futures were trying to recover from mid-week losses along the market's underlining optimism over global economic growth after the United States inked a historic trade agreement with China and Congress passed a new NAFTA accord on Thursday. Both deals are seen boosting global economic growth and by extension fuel demand, while also increasing U.S. energy exports.
Global equities rallied on Friday, with all major U.S. stocks resetting their record highs at the end of an exuberant week while the U.S. dollar rallied to a six-week high 97.335 in afternoon index trade.
At settlement, NYMEX February West Texas Intermediate futures inched up $0.02 to $58.54 per bbl after trading at a one-week spot high $58.98 mid-session. ICE March Brent futures moved up $0.23 to $64.85 bbl after briefly breaking through $65 bbl intra-session. Products held lower in afternoon trade, with NYMEX February RBOB futures down 1.42 cents to settle at $1.6406 a gallon and front-month ULSD contract moved down 0.08 cent at $1.8592 a gallon, near the 4 1/2-month spot low.
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