DTN Oil

WASHINGTON (DTN) -- After a brief pause midday Thursday, oil futures nearest delivery on the New York Mercantile Exchange and the Intercontinental Exchange followed equities higher in afternoon trade. This followed better-than-expected employment and manufacturing data in the United States combined with an effective nationwide vaccine program rollout that sparked renewed optimism over demand recovery in the second half of 2021.

Further bolstering expectations, Saudi Arabia's national oil company Aramco raised its official selling price for Arab Light crude by 85 cents per barrel (bbl) to North American refiners, suggesting a tightening market.

The U.S. Energy Information Administration reported Wednesday domestic production remained muted below 11 million barrels per day (bpd) and commercial crude oil stocks declined for three out of four weeks this year, sending inventories to their lowest levels since late March 2020 at 475.659 million bbl. Distillate supplied to the U.S. market, a measure of demand, jumped to above pre-pandemic levels, averaging 4 million bpd in the most recent four weeks. Demand for gasoline, however, continued to trail behind last year's levels by 10.2%, averaging 7.812 million bpd for the month of January.

Weighed down by high unemployment numbers and mobility restrictions on some of the largest U.S. states, gasoline consumption had little reason for optimism near-term. That might soon change.

This week's macroeconomic data suggests the economy has been improving, with unemployment claims falling for a third consecutive week and managers in charge of buying supplies for U.S. companies reported increased business activity last month amid robust demand for new orders.

Department of Labor said Thursday morning the number of Americans filing for first-time unemployment benefits fell to a two-month low 779,000 during the final week of January, while the number of people receiving ongoing benefits dropped to the lowest level since the beginning of the pandemic at 4.592 million.

With coronavirus cases retreating and a nationwide immunization program continuing to scale up, Americans could feel more comfortable returning to the workforce and employers to reopen their businesses.

On a national level, U.S. administered over 35 million doses since Dec. 14 -- placing the country among the top three in a race to vaccinate the citizenry. The next round of shots, beginning next week in some states, will likely prompt an increase in the number of administered doses as more pharmacies and health clinics -- places that traditionally attract a broader pool of people -- join the vaccination campaign. Bloomberg vaccine tracker estimates the country is currently on pace to vaccinate 75% of the population this year -- the percentage scientists often refer to as "herd immunity."

Currency markets have been increasingly pricing this developing reality into the value of the U.S. dollar that surged to the highest level since late November 2020 at 91.560 as the euro and Chinese renminbi have weakened against the greenback.

On the session, West Texas Intermediate futures for March delivery added 54 cents to settle just above $56 bbl at $56.23 bbl, while front-month Brent futures on ICE gained 38 cents to $58.84 bbl -- a fresh 13-month high on the spot continuous chart. NYMEX March ULSD advanced 1 cent to $1.7005 gallon and the RBOB contact for March posted fractional losses to settle at $1.6448, paring an overnight advance to a one-year spot high at $1.6615 gallon.

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