Oil Futures Gain as US Dollar, Treasury Yields Slide on Recovery

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude futures traded on the Intercontinental Exchange rose in early trade Tuesday, with the U.S. crude benchmark holding above $65 per barrel (bbl) on growing sentiment for a stronger post-pandemic U.S. economic recovery than previously envisioned that would support increased demand for oil, while the expected passage of a $1.9 trillion stimulus package by the House of Representatives as early as Tuesday powered equity futures higher amid an overnight pullback in U.S. treasury yields.

U.S. Dollar Index retreated from Monday's better than four-month high, trading down 0.29% at 92.075 against sic global currencies, lending support to front-month West Texas Intermediate futures. NYMEX WTI April contract traded near $65.50 bbl in early trading, with the international crude benchmark Brent contract for May delivery trading near $68.85. NYMEX April ULSD futures rallied 1.5 cents to trade at $1.9235 gallon and front-month RBOB future gained 2.35 cents to near $2.0725 gallon after trading at a nearly 23-month high $2.1119 gallon on Monday.

Trading early Tuesday returned focus to a post-pandemic recovery fueled in part by additional fiscal measures in the world's largest economy, the United States, where the House of Representatives is expected to approve a $1.9 trillion stimulus bill that passed in the U.S. Senate on Saturday. The package includes $1,400 stimulus checks to most Americans and an extension of unemployment benefits through Sept. 6, with the federal government to subsidize state unemployment insurance by $300 weekly. All of these measures seen boosting consumers' discretionary spending in the second and third quarters as the economy reopens from COVID-19 shutdowns.

Benchmark 10-year U.S. Treasury bond yields fell by around 7 basis points from Monday to trade at 1.54% early Tuesday, boosting equity futures this morning after the Dow Jones Industrial Average reached a fresh record high 32,148.04 on Monday. DJIA futures are up 190 points, with the S&P 500 Index set for a 38-point advance at the start of trading.

Centers for Disease Control and Prevention data on Monday showed the United States has administered more than 92.1 million doses of COVID-19 vaccines, bringing the daily average inoculation rate to 2.17 million doses -- the highest in the world. At this rate, it would take an estimated six months to cover 75% of the U.S. population with a two-dose vaccine.

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

Liubov Georges