DTN Oil

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange were trading near fresh one-month highs and Brent crude on the Intercontinental Exchange at a two-week high late Thursday morning, with the RBOB contract leading the advance following an explosion and fire at a gasoline unit at ExxonMobil's Baytown refinery near Houston.

Early reports indicate the gasoline unit was closed Wednesday to investigate a leak ahead of the overnight incident at the 584,000 barrels per day (bpd) refinery, the country's second largest. Four people were reported injured.

The market was taking the news in stride with January RBOB futures initially rallying overnight to a $2.2089 gallon four-week high on the spot continuous chart before paring the advance, trading up 2.1 cents near $2.1890 gallon late morning. On Wednesday, the Energy Information Administration reported a 5.533 million barrel (bbl) increase in nationwide gasoline stocks for the week ended Dec. 17, lifting inventory to 224.118 million bpd, the highest stock level since the end of the third quarter.

NYMEX January ULSD futures, which settled above resistance at the $2.2780 50% retracement point for the fourth quarter downtrend for the first time in December on Wednesday, added to gains early Thursday, up about 1 cents at $2.3178 gallon after trading at a fresh $2.3345 gallon four-week high on the spot continuous chart. EIA reported a modest 396,000 bbl build in distillate inventories for the week ended Dec. 17, with stocks at 124.154 million bbl, 7.1 million bbl or 5.4% below the three-year average.

February West Texas Intermediate on NYMEX was up modestly near $73 bbl, having traded earlier in the session at a fresh four-week spot high at $73.33 bbl, continuing to hold below the $73.72 trendline for the uptrend from the November 2020. EIA on Wednesday reported a steep 4.715 million bbl draw in commercial crude inventory in the United States for the week ended Dec. 17, lowering the stock level to a 423.571 million bbl 11-week low, while 37.2 million bbl or 8.1% below the three-year average.

February Brent futures were also up modestly, trading at $75.60 bbl and near a $75.79 fresh two-week high.

A firmer U.S. dollar, trading 96.155 in index trading, is also limiting the upside for WTI futures. Dollar strength follows macroeconomic news Thursday morning that was largely supportive for the U.S. economy.

The Census Bureau this 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 ending Dec. 11 was unchanged at 1.4%.

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.

Brian L. Milne can be reached at brian.milne@dtn.com