Crude Oil, Gasoline Close Higher Thursday

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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February WTI crude oil futures closed up $1.03 at $73.79 while March closed up $1.09 at $73.42 and February Brent crude oil closed up $1.56 at $76.85 per barrel. January RBOB closed up 3.81 cents at $2.2061 and February RBOB was up 3.83 cents at $2.2033.

DTN Refined Fuels Manager Brian Milne reported earlier, "The Census Bureau Thursday morning reported durable goods orders surged 2.5% in November that was above market expectations for a 1.5% increase, while October's initial reading of a 0.5% decline was revised up to a modest 0.1% gain. Durable goods orders have now increased in six of the last seven months.

"The Department of Labor reported initial filings for unemployment insurance were unchanged for the week ended Dec. 18 at 205,000, while the four-week average increased 2,750 to 206,250. The seasonally adjusted insured unemployment rate for the week ended Dec. 11 was unchanged at 1.4%."

Milne added, "The University of Michigan's consumer sentiment index edged up 0.2 points from December's preliminary reading to 70.6 while the market expected no change, with the index up from November's 67.4 reading that was the weakest in 10 years, since November 2011. Richard Curtin, the chief economist for the survey, said the improvement was due primarily due to significant gains in households with lower incomes that see their incomes improving by 2.8% in 2022, which compares with a 1.8% increase in the year ahead expectation in December 2020, while the largest since December 1999 when the year ahead outlook was for a 2.9% boost in income.

"'There have only been five times in the past half century that income expectations among low-income households have exceeded the December 2021 level. The announced increase in Social Security payments of 5.9% in 2022 was partly responsible for the gain, and 5.0% increases in expected wage among the youngest workers,' said Curtin. He said inflation concerns still weighed on consumer sentiment, with one-in-four households blaming inflation in eroding their living standards.

Dow Jones noted benchmark oil prices ended the day at their highest since Nov. 24, ending with a 1.4% gain for the session and a 4.5% increase for the holiday shortened week. "Investors have reignited a crude rally this month on expectations that the omicron variant's impact on global oil demand will be much less than people thought at first. Thursday's trading also found price support from a refinery fire at an ExxonMobil plant in Texas that's one of the largest oil refineries in the country. The fire's been extinguished, but it's operating at reduced rates, and that helped drive gasoline futures higher as well."

The Baytown refinery has the capability to process up to 584,000 barrels per day (bpd) of crude oil according to ExxonMobil's website. "That makes it the fourth-largest U.S. refinery, only 8% smaller than the largest, the Motiva Enterprises facility in Port Arthur, Texas, owned by Saudi Aramco. Baytown is one of only five U.S. refineries with a capacity of more than 500,000 barrels a day," reported CNN.

"The refinery incident Thursday could hamper output for months, weighing on gasoline supply at a time when U.S. refining capacity has already been reduced," Tom Kloza, chief oil analyst for the Oil Price Information Service told CNN. ""Fortunately, we don't need the gasoline (from Baytown) for the next six weeks," Kloza said. "But by spring, when demand starts to increase again, the lost output from Baytown will likely be felt at pumps nationwide."

Natural gas prices finished 6.2% lower on the day, still reacting to the bearish weekly EIA report Wednesday that noted warmer weather has caused gas demand to shrink. But for the week, it had a gain of 1.1%, ending a string of three weeks of losses. DTN Refined Fuels reported Wednesday that working natural gas storage in the United States declined 55 billion cubic feet during the week ended Dec. 17, with the withdrawal slightly less than an expected 57 Bcf decrease. At 3.362 trillion cubic feet, natural gas storage as of Dec. 17 was 234 Bcf or 6.5% less than year ago, and 34 Bcf or 1% more than the five-year average.

Baker Hughes noted on their website Thursday that the number of active oil rigs in the U.S. rose by five rigs to 480 this week. The weekly rig count was issued one day early due to markets being closed on Friday Dec. 24.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

Mary Kennedy

Mary Kennedy
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