DTN Oil Update
Oil Futures Dropped on Israel-Hamas Ceasefire Confirmation
HOUSTON (DTN) -- Oil futures fell on Friday morning as market participants adopted a wait-and-see approach ahead of the start of a second term for President-elect Donald Trump, and after Israel's security cabinet approved Friday, a cease-fire in the Gaza Strip and agreed to release hostages.
The NYMEX WTI futures contract for February delivery dropped by $0.26 to $78.42 bbl while the March ICE Brent futures contract fell by $0.48 to $80.81 bbl. The February RBOB futures contract edged down by $0.0065 to 2.1167 gallon. The front-month ULSD futures contract fell by $0.0163 to $2.6009 gallon.
In the opposite direction, the U.S. Dollar Index rose by 0.32% to 109.14 against a basket of foreign currencies.
Oil futures markets paused their multi-month gains recorded in the last few weeks as market participants await the presidential inauguration as Trump is scheduled to be sworn in for his second term on Monday, Jan. 20.
Trump has threatened to impose trade tariffs on imported goods from China, the European Union, Mexico, Canada and other countries, which are expected to have a negative impact on the U.S. economy.
Concerns of global supply tightness eased this morning in the oil futures market following the formalization of a ceasefire deal between Israel and Hamas ending a 15-month war.
Additionally, the announcement of Colonial Pipeline saying that it expects to restart operations at its Line 1 Friday, also contributed to the bearish sentiment downstream.
"We now estimate an earlier-than-expected restart of Line 1 on Friday if site conditions remain stable and safe repairs, coordinated with relevant agencies, proceed as planned. We will provide updated schedules to our shippers as work continues," CPL said in a statement.
Separately, the outlook of a steady oil global demand this year was supported by a considerable increase of China's GDP. In the fourth quarter of 2024, the Chinese economy rose to 5.4% year-on-year, up from 4.6% from the previous year, the highest level of the year.
China is the main buyer of crude oil and oil products in the world, but demand from Chinese refineries remained sluggish last year putting downward pressure on prices globally.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com