DTN Oil Update
Oil Futures Gain on Limited Supply Concerns
HOUSTON (DTN) -- Oil futures rose for the third consecutive trading session on Wednesday, driven by expectations of global supply tightness and confirmation that the Fed will maintain its decision to pause interest rate cuts in the short term.
The front-month NYMEX WTI futures contract rose by $1.07 to $73.39 bbl and the April ICE Brent futures contract climbed by $1.18 to $77.05 bbl. March RBOB futures contract rose by $0.0468 to $2.1510 gallon while ULSD futures contract for March delivery rose by $0.0701 to $2.5210 gallon.
The U.S. Dollar Index dropped by 0.34% to 107.830 against a basket of foreign currencies.
Federal Reserve Chair Jerome Powell testified Tuesday before the Senate Banking Committee, stating that the Fed is not in a hurry to increase interest as the economy remains strong.
Tomorrow, Feb. 13, the Bureau of Labor Statistics is scheduled to release the Consumer Price Index for January, which is expected to be around 2.8%, compared to 2.9% recorded in December.
The bullish sentiment in the oil futures market is supported by expectation of supply tightness driven by recent sanctions on Russian and Iranian crude.
On Jan. 10, the U.S. Department of the Treasury imposed sanctions on a significant number of vessels, including a shadow fleet and blocked two major Russian oil producers.
Last week, the United States also imposed sanctions on "an international network for facilitating the shipment of millions of barrels of Iranian crude worth hundreds of millions of dollars to the People's Republic of China," according to a statement released by the Treasury on Feb. 6.
Limited global supplies will be driven also by OPEC's decision to keep its voluntary output cuts of 2.2 million bpd until April. OPEC is expected to continue trimming production due to the potential impact on the global economy of retaliatory 10% trade tariffs the United States levied on imported goods from China, and 25% tariffs on imports of aluminum and steel from Canada and Mexico.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
