DTN Oil Update
Oil Futures Up on Limited Supply Expectations
HOUSTON (DTN) -- Oil futures rose for the sixth consecutive week on Monday on expectations of tight supplies due to limited inventory stocks, coupled with high demand driven by severe cold weather.
The February NYMEX WTI futures contract rose by $0.26 to $74.22 barrel (bbl), while the front-month ICE Brent futures contract climbed by $0.31 to $76.82 bbl. The RBOB futures contract for February delivery rose by $0.0047 to $2.0584 gallon and the front-month ULSD edged up by $0.0168 to $2.3646 gallon.
Meanwhile, the U.S. Dollar Index dropped by 0.99 to 107.805 against a basket of foreign currencies.
"This week will see a return of normal market conditions and a pick-up in FX liquidity. That may lead to some softening in the dollar's momentum, as the greenback could reconnect with the slight deterioration in its rate advantage over the holiday period," said Francesco Pesole, analyst at ING Research, in a report.
The oil futures market has been bullish to start the year supported by declining crude inventory levels reported by the EIA for six consecutive weeks. Last week, the EIA said commercial crude oil inventories in the U.S. fell by 1.2 million bbl to 415.6 million bbl in the week ended Dec. 27.
Oil futures were also moving up Monday following President Joe Biden's decision to ban new offshore oil and gas drilling in most U.S. coastal waters before President-elect Donald Trump is sworn in for a second term on Jan. 20.
"Biden's actions, which protect more than 625 million acres of federal waters, could be difficult for President-elect Donald Trump to unwind, since they would likely require an act of Congress to repeal," according to an AP report.
Baker Hughes weekly data showed the number of rigs in the United States actively drilling for oil fell by one to 482 as of Friday, Jan. 3, down 19 compared year-over-year.
Separately, increasing demand for heating oil due to severe cold weather across the U.S. is anticipated to put upward pressure on oil future prices.
The National Weather Service forecasts a major winter storm moving from the Ohio Valley to the Mid-Atlantic on Monday, while high winds are expected to affect parts of southern California resulting in power outages and fire weather.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
