DTN Oil Update
Oil Futures Dipped Driven by Weak Demand Outlook
HOUSTON (DTN) -- The NYMEX WTI futures contract for January delivery and the front-month ICE Brent futures contract settled lower on Thursday, on expectations of sluggish global demand next year, and inflationary pressures in the U.S. economy next.
Oil futures continued on bearish ground one day after the Federal Reserve revealed that inflation levels for 2025 will remain at similar levels seen this year surpassing its 2% target. Energy Information Administration data showed demand for crude was lower than expected last week.
The Federal Reserve anticipates a range for the federal funds rate of 4.25%-4.50% next year and maintains its projection of 4.4% inflation for this year.
At 3:10 p.m. EST, January WTI futures edged down $0.67 to $69.91 bbl while the February Brent contract dropped $0.74 to $72.65. NYMEX January ULSD futures fell $0.0236 to $2.2314 gallon and the front-month RBOB futures dipped $0.0264 to $1.9164 gallon.
Meanwhile, the U.S. Dollar Index gained ground against a basket of foreign currencies at 108.13, up 0.38% from the previous trading session.
The crude oil market is beginning to take a more cautious stance as the end of the year approaches, tracking recent reports from OPEC and the International Energy Agency forecasting low global demand driven by China for next year, amid ample supplies.
Downstream, output of California mandated ultra-low sulfur diesel slid more than 40% through Dec. 13, according to the California Energy Commission's latest Weekly Fuels report.
Data showed that overall CARB ULSD output fell 373,000 bbl last week to 506,000 bbl, a drop of 47.5% versus the same week in 2023. CARB ULSD inventories in the state rose 69,000 bbl to 1.798 million bbl as of Dec. 13, just slightly lower than a year earlier. Meanwhile, CEC reports overall jet fuel output fell 184,000 bbl on the week to 1.999 million bbl.
Late Wednesday, the American Petroleum Institute urged the upcoming Trump administration to rescind the U.S. Environmental Protection Agency's approval of California's request for a Clean Air Act waiver for the Advanced Clean Cars II light and medium duty vehicle standards.
"Allowing California and 12 other states to outright ban new gas-powered vehicles and traditional hybrids deepens the dependence on China," API Vice President of Downstream Policy Will Hupman said in a statement.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
