DTN Oil

WASHINGTON (DTN) -- Heading into the last trading session before the Thanksgiving Day holiday, nearby delivery West Texas Intermediate futures on the New York Mercantile Exchange broke through $45 per barrel (bbl) and products futures are trading at fresh highs as investors continued to bet successful development of multiple coronavirus vaccines this year would improve oil market's near-term fundamentals, while waiting for the morning release of several data sets on the U.S. economy and the domestic oil market.

In early trading, NYMEX January WTI futures added 23 cents to trade just above $45 bbl after surging more than 4% prior session and ICE January Brent futures broke through $48 bbl, in position to push past $50 bbl. NYMEX December ULSD futures rallied to a fresh nine-month spot high at $1.3787 gallon before paring the advance, and the December RBOB contract was trading just above $1.2600 gallon.

Wednesday's tepid gains came despite bearish inventory data from the American Petroleum Institute released late Tuesday, highlighting the divergence between current market fundamentals and expectations for future gains in fuel demand. The data showed commercial crude oil supplies increased 3.8 million bbl during the week-ended Nov. 20, nearly 2 million bbl above market consensus. Gasoline stockpiles added 1.3 million bbl, more than three times calls, and distillate inventories dropped 1.8 million bbl, about 2 million below the high end of the projected range. U.S. Energy Information Administration will release official statistics for the reviewed week at 10:30 a.m. ET.

In broader markets, U.S. equities slipped lower in pre-market activity as investors braced for a pre-Thanksgiving slew of economic data domestically, beginning with durable goods orders for October and the second reading on U.S. gross domestic product for the third quarter on tap for an 8:30 a.m. ET release. Consensus calls for GDP reading to remain unchanged at 33.1%. At 10:00 a.m. ET, data on consumer spending, consumer sentiment and new home sales are expected, with minutes of the Federal Reserve's November policy meeting to be released at 2 p.m. ET.

Consumer confidence index released by Conference Board earlier this week showed consumers feel increasingly anxious about the short-term outlook for the economy and personal finances amid continued surge in COVID-19 cases and the absence of another stimulus deal from Washington. J.P. Morgan sees economic growth in the first quarter next year to slip into contraction in the world's largest economy.

Regardless of worrisome signs, investors are looking past the market's poor short-term fundamentals and towards a post-coronavirus recovery for the global economy and fuel demand. The jubilant sentiment was further spurred by a slew of announcements from top U.S. and EU health officials this week suggesting preparations for large-scale vaccination programs are already underway and might start as early as next month. Germany announced its nationwide plan to redistribute its first doses of the vaccine in the final weeks of December, while announcing gradual easing of lockdown restrictions beginning next week. In the United Kingdom, the stringent quarantine restrictions will be allowed to expire on Dec. 2, replaced with more targeted measures.

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

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