DTN Oil

CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced Tuesday, with the RBOB contract settling at a four-day high on expectations for busy holiday travel. Meanwhile, the January West Texas Intermediate contract expired just above $76 per barrel (bbl), underpinned by a weaker U.S. dollar.

The U.S. dollar settled down 0.7% at 103.606 in index trade against a basket of foreign currencies, finding support on an intraday basis at the Dec. 14 103.395 six-month low, coming under selling pressure by a surprise move by the Bank of Japan. BOJ expanded its target range for the 10-year bond yield from 25 basis points on either side of 0% to 50 basis points, rallying the yen, which appreciated 4.2% on the session.

Offsetting dollar weakness, WTI futures gains were capped by reports TC Energy submitted a plan to restart the Keystone pipeline from Steele City, Nebraska, to Cushing, Oklahoma, to the Pipeline Hazardous Materials and Safety Administration for review. The entire 610,000-barrel-per-day (bpd) pipeline was shut by the operator on Dec. 7 following a rupture in Mill Creek, Kansas, leaking an estimated 14,000 bbl of crude oil. The pipeline originates in Hardisty, Alberta, in Canada, and splits into two lines at Steele City with one running to Cushing and a separate leg traveling to refineries in Wood River and Pakota, Illinois. The Steele City-to-Illinois line was restarted on Dec. 14.

January WTI futures expired $0.90 higher at $76.09 per bbl, with the February contract settling the session at a $0.14 premium to January at $76.23 per bbl. ICE February Brent futures ended the session little changed at $79.99 per bbl, up $0.19.

NYMEX January ULSD futures settled up a modest $0.0054 at $3.0589 per gallon, with the backwardation in the prompt spread narrowing $0.0058 to a $0.0298 one-week low. NYMEX January RBOB futures rallied $0.0452 to a $2.2228-per-gallon settlement, boosted by expected strong driving demand over the holiday period, which kicks off Friday, Dec. 23.

The American Automobile Association expects 2 million more people in the United States will travel more than 50 miles from their homes by highway than a year ago, estimating nearly 102 million people on the highway during the travel season, which extends to Jan. 2.

AAA also sees a sharp increase in air travel, projecting a 14% increase from year ago, with 7.2 million people in the United States seen flying to their destination, just shy of 2019's 7.3 million people.

Demand for jet fuel has been the standout in 2022, averaging 1.544 million bpd through the first week of December, up 187,000 bpd or 13.8% cumulatively against the comparable period in 2021, according to Energy Information Administration data. In contrast, gasoline supplied to the U.S. market over the same period is down 266,000 bpd or 3% against a year ago at 8.709 million bpd, and demand for distillate fuels trails the corresponding year-ago period by 112,000 bpd or 2.8% at 3.93 million bpd.

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