Oil Futures Follow Equities Lower as USD Regains Momentum

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Reversing earlier gains, West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Thursday's session lower amid risk-off sentiment in broader markets as equities on Wall Street accelerated a selloff and the U.S. dollar regained momentum into afternoon trading.

Thursday's lower settlements follow a two-session rally for the crude complex as traders positioned for this winter's first arctic storm that is pushing through the Great Plains and upper Midwest to northern New England states and reaching as far south as Texas. The cold snap is set to disrupt some holiday travel, with as many as 1,700 flights canceled by midmorning Thursday and another 2,500 having been delayed, according to tracking site FlightAware. Several airlines issued fee waivers for those looking to rebook flights later this weekend.

The arctic blast is delivering bone-chilling temperatures to large swaths of the country, while demand for heating oil in the Northeast is set to surge, with 83% of the country's space heating demand satisfied with heating oil drawn by households in New England states. The Energy Information Administration reports the region's distillate fuel stocks at 4.277 million barrels (bbl) on Dec. 16, 2.6 million bbl or 37.5% below the comparable year-ago period. DTN meteorologists forecast that a complete flip of the weather pattern will occur next week as above-normal temperatures will take hold across Central and Eastern U.S.

In financial markets, U.S. equities plummeted on Thursday and the dollar index reversed higher, sending Dow Jones Industrials down as much as 600 points. DJIA was about 350 points lower in late session trade, and S&P 500 was down 1.4%.

The Labor Department on Thursday reported initial jobless claims rose to 216,000 last week but were still below estimates for a rise to 225,000. Also, the Bureau of Economic Analysis in its final estimate for third-quarter U.S. Gross Domestic Product reported a stronger-than-expected 3.2% annualized growth rate compared with their previous estimate of 2.9%.

At settlement, U.S. dollar rallied 0.27% against a basket of foreign currencies to settle at 104.127, weighing on front-month WTI futures. The February WTI contract fell $0.80 to $77.49 per bbl at settlement, and the international crude benchmark Brent contract for February delivery declined $1.22 to $80.98 per bbl. NYMEX January ULSD futures settled down $0.0081 at $3.1314 per gallon, and front-month RBOB futures slipped $0.0070 to $2.2488 per gallon.

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

Liubov Georges