WTI Ends at 13-Month High as Crude Stocks Fall

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange settled Wednesday's session mostly higher, although off intrasession highs, as traders appear to have taken profits following a data-driven rally underpinned by falling U.S. crude inventories, a weakening dollar and bullish momentum in financial markets.

On the session, West Texas Intermediate for March delivery futures added 32 cents to a fresh 13-month spot high $58.68 barrel (bbl) and the international crude benchmark Brent contract for April delivery climbed a like amount for a $61.47 settlement. NYMEX March ULSD futures gained 0.43 cent to a one-year spot high $1.7610 gallon and March RBOB futures shed 2.02 cents to $1.6534 gallon.

The U.S. dollar index ended weaker in afternoon trade against a basket of foreign currencies at 90.363 after plumbing a fresh two-week low 90.235, as investors appear to bet big that the final coronavirus stimulus relief bill will match Biden's proposed price tag of $1.9 trillion. Some believe the massive bill is critical for the U.S. economy to return to its pre-crisis level, although others have panned the proposal as unfocused and unnecessary. Treasury Secretary Janet Yellen said earlier this week the labor market could return to full employment by 2022 should U.S. Congress pass the bill.

In terms of economic data, the Consumer Price Index for January was in line with market consensus for a 0.3% uptick, following the previous month's reading at 0.4%.

Equities were mixed late afternoon, with the Dow Jones Industrial Average up about 60 points after snapping a six-day advance on Tuesday with a small loss. The S&P 500 Index was slightly lower for a second session, while the NASDAQ composite moved down from Tuesday's record high 14,008 close.

Prompt-month WTI contract climbed to a fresh 13-month high on Wednesday after government data showed a sizable drawdown from U.S. commercial crude supplies during the week ended Feb. 5, accompanied by a larger-than-expected decline in distillate supplies. Data showed crude stocks fell 6.645 million bbl from the previous week to the lowest level since late March 2020 at 469.014 million bbl. Domestic crude supplies now stand 2% above the five-year average.

Gasoline stockpiles increased above expectations with a 4.5 million bbl build, although the gain is in line with the commodity's seasonal pattern, with demand for motor fuels typically weakest in January and February. Gasoline supplied to the U.S market, a measure for demand, remained more than 10% below the pre-pandemic level at 7.8 million bpd, with driving demand constrained in parts of the U.S. Northeast during the weekly period because of wintry weather including blizzard conditions in parts of the region.

Seasonally, gasoline demand and prices increase into the spring, with the April contract widening its premium to the front month to 13.07 cents Wednesday. An improved posture against the pandemic and the reopening of schools should support increased driving demand in the coming months.

The Biden administration on Tuesday announced new steps to speed up a federally guided vaccine program, including increasing states' weekly vaccine allocations, sending vaccine doses directly to community health centers, and ramping up efforts to staff thousands of federal vaccination sites countrywide. According to Centers for Disease Control and Prevention's data, a total of 43.2 million doses had been administered to Americans as of Tuesday morning. Of those, about 32.9 million Americans had received "one or more doses" and about 9.8 million had received two doses, the data shows. This week's inoculation rate jumped above 1.5 million doses a day, with the United States currently on track to vaccinate 75% of its population in the next nine months.

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

Liubov Georges