DTN Oil Update

Oil Futures Soared Amid Limited Supply Concerns

HOUSTON (DTN) -- Oil futures settled higher Monday, driven by expectations of limited oil global supplies as U.S. President Joe Biden's administration tightened sanctions on Russian oil trade, just days before ending his term.

The front-month NYMEX WTI futures contract rose by $2.29 to $ $78.86 barrel (bbl) hitting again a multi-month high, March Brent futures contract saw a similar fortune as it climbed by $1.24 to $81 bbl. The front-month RBOB futures contract advanced by $0.0259 to $2.1008 gallon; the ULSD futures contract for February delivery rose by $0.032 to $2.5338 gallon.

The U.S. Dollar Index also rose by 0.27% to 109.755 against a basket of foreign currencies.

The expectations of limited supply availability resulting from fewer cargoes of Russian crude and oil products in global markets keep supporting the rally on oil futures.

The U.S. and the U.K. announced on Friday, Jan. 10, tougher sanctions on Russian crude targeting 183 oil tankers from a shadow fleet, two Russian gas producers, traders and ports, among other entities. The sanctions will take effect on Feb. 27.

The bullish sentiment prevailing in the oil futures markets was driven also by an improvement on recent China's key economic data suggesting oil demand recovery could be led again by this country as some Chinese ports are declining to take Russian oil already, according to some media reports.

China's official customs data showed exports in December rose 10.7% year-over-year, surpassing market expectations of 7%. Imports rose 1% compared to the previous year, above the estimate of a 1.5% decline.

Chinese trading activity has increased considerably in recent months before President-elect Donald Trump's administration prepares to impose trade tariffs on imports from China, the European Union, Canada, and Mexico. Trump is scheduled to be sworn in for a second term on Jan. 20.

Domestically, the Bureau of Labor Statistics is expected to release on Wednesday the U.S. Consumer Price Index for December. The CPI rose 0.3% in November, compared to 0.2% in October. For December, the market consensus anticipates that CPI will remain steady at 0.3%.â?¯

Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com