DTN Oil Update
Oil Futures Up Driven by Supply Tightness Expectations
HOUSTON (DTN) -- Oil futures edged up Friday morning on supply tightness expectations driven by additional sanctions against Russia for its incursion into Ukraine and China's pledge to implement a stimulus plan to boost its economy next year.
WTI and Brent crude prices remained on a bullish ground to close the week after the EU ambassadors approved the 15th package of sanctions against Russia, which adds more persons and entities to the already existing sanctions list.
But the list also targets a shadow fleet that Russia uses to evade restrictions on transporting oil and fuel, which can reduce the supply of Russian crude and oil products to international markets.
The bullish sentiment was also fueled by optimism surrounding China's shift in its monetary policy, the first signal of change in over a decade.
After a two-day conference in Beijing, the Chinese Communist Party's Politburo pledged Thursday to implement a stimulus program by increasing government spending coupled with a looser monetary policy. However, the targets of GDP or interest rates levels for next year, discussed by China's top leaders during the conference, were not disclosed.
Separately, the Federal Reserve is expected to cut interest rates next week based on the latest consumer price index showing ongoing inflation pressureâ?¯as it rose 0.7% in November, in line with expectations, but above 0.6% reported in October. Analysts estimate the Federal Reserve will trim interest rates by 25 basis points to as low 3.0% in its Federal Open Committee meeting on Dec. 18.
The Bureau of Labor Statistics reported Thursday that the Producer Price Index PPI for final demand rose 0.4% in November after seasonal adjustment, above 0.3% in October and 0.2% in September. On an annual basis, the index rose 3%, which is the largest increase since February 2023.
The index is another indicator of consumer price inflation as it measures the average change in the selling prices domestic producers receive for their production.
At 8:56 a.m. EST, January NYMEX WTI futures contract rose $0.37 to $70.39, and February Brent was $73.76 barrel (bbl), up $0.35. Front-month ULSD rose $0.0014 to $2.2480 gallon, while RBOT for January delivery edged up $0.0063 to $1.9948 gallon.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
