WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange settled Tuesday's session higher, spurred by expectations a drawdown in U.S. commercial crude inventories occurred during the week ended Dec. 25. Also, a broader rally in financial markets fueled by a new coronavirus relief package signed by U.S. President Donald Trump late Sunday sparked additional buying interest.
The American Petroleum Institute on Tuesday reported U.S. commercial crude oil inventories declined a larger-than-expected 4.785 million barrels (bbl) during the week ended Dec. 25, while distillate stocks dropped 1.877 million bbl and gasoline supplies fell 718,000 bbl from the previous week.
Private mobility data shows driving activity during the holiday week fell nearly 3% from the previous week to the lowest rate since Easter Sunday, April 12. Although a sharp drop-off in traffic volumes during major holidays is not unusual in the United States, implied demand for gasoline this year is lagging 1.2 million barrels per day (bpd) or 12.9% below 2019 levels.
Traders now await official inventory data from the U.S. Energy Information Administration due out Wednesday at 10.30 a.m. EST.
At settlement, NYMEX February West Texas Intermediate futures were up $0.38 at $48 bbl, with ICE February Brent finishing just above $51 at $51.09, gaining $0.23 from the previous session's close. February Brent expires Wednesday, with the March contract expanding its premium to a still tight 0.14 cents against February delivery. NYMEX January ULSD futures gained 0.78 cents to $1.4868 gallon ahead of expiration Thursday, with the February contract holding near parity. NYMEX January RBOB futures added 2.02 cents to $1.3879 gallon ahead of expiration later this week, with February delivery at a 96-point contango.
The U.S. Dollar Index continued lower, ending near this month's more than 2-1/2 year low at 89.918, as currency traders anticipate additional government spending after the House of Representatives on Monday passed a bill that would boost individual checks to Americans to $2,000 -- a proposal lobbied for by Trump. U.S. Senate Majority Leader Mitch McConnell, however, blocked Democrats' attempt to quickly approve through a unanimous vote the proposed $1,400 hike from the current $600 already part of $897 billion coronavirus relief package. He did, however, hint at another round of fiscal stimulus sometime next year.
Major equity indexes retreated slightly from the all-time highs reached Monday, with the Dow Jones Industrial Average ending down 68.30 points at 30,335.67 and the S&P 500 Index down 0.2%.
Separately, the Transportation Security Administration on Sunday reported the highest number of passengers passed through the U.S. checkpoints since the beginning of the pandemic at 1.3 million. Despite repeated warnings from the Centers for Disease Control and Prevention for Americans to refrain from travel, Sunday was the sixth day of the Christmas holiday rush to see screenings exceed one million a day.
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