DTN Oil Update
Oil Futures Rallied on December Job Data
HOUSTON (DTN) -- The February WTI futures contract on the New York Mercantile Exchange and the Brent futures contract on the Intercontinental Exchange rallied Friday morning, recording gains of over $3, on better-than-expected U.S. employment data.
The Bureau of Labor Statistics reported Friday that total non-farm payroll employment increased by 256,000 in December, compared to 227,000, recorded the previous month.
The market consensus anticipated a range of 125,000 to 200,000. The unemployment rate was 4.1%, below the market expectation of 4.2%, but still high compared to the jobless rate of 3.7% recorded year-over-year.
Although a strong non-farm payroll number is a signal of a strong economy, analysts expect that, despite the surprising hike in December's employment number reported Friday, inflationary pressures will continue this year.
NYMEX WTI futures contract futures delivery rose by $3.09 to $77.01 bbl while the February ICE Brent futures contract climbed by $3.01 to $79.93 bbl. Both crude benchmarks hit six-month record highs. The front-month RBOB futures contract edged up by $0.0631 to $2.0914 gallon, the ULSD futures contract for February delivery rose by $0.1047 to $2.4829 gallon.
Goldman Sachs Research forecasts that crude benchmark Brent will trade in a range of $70-$85 bbl this year, at an average of $76. "Prices will be heavily influenced by the rate of production in non-OPEC countries and potentially also by geopolitical factors, from sanctions to tariffs," according to Daan Struyven, head of oil research.
The bullish sentiment in the oil futures was driven also by reports of declining U.S. crude stocks as a result of a hike of refinery utilization and demand resulting from severe weather conditions across the U.S.
Commercial crude oil inventories in the U.S. dropped by 1 million bbl to 414.6 million bbl in the week ended Jan. 3, while refinery utilization rates were 93.3% in the week ended Jan. 3, compared to 92.7% recorded the prior week.
The U.S. Dollar Index rose by 0.52% to 109.525 against a basket of foreign currencies.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
