DTN Oil Update
Crude at 4-Month High as US Dollar Trades Near 4-Year Low
VIENNA (DTN) -- Oil prices edged higher Wednesday, Jan. 28, morning as the U.S. dollar continued to weaken. Front-month Brent and WTI futures traded at their highest since September, while the U.S. Dollar Index fell to its lowest in nearly four years.
WTI futures for March delivery rose $0.68 to $63.07 bbl, and ICE Brent for March delivery advanced $0.54 to $68.11 bbl.
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Downstream, NYMES RBOB futures for February delivery added $0.0203 to $1.8855 gallon, while ULSD futures edged up $0.0022 to $2.6484 gallon.
The U.S. Dollar Index edged up 0.054 points to 96.105 following Tuesday's 0.8-point slip. The index slipped by more than 2.5 points in the last four trading sessions to its lowest since February 2022, lending support to commodities priced in that currency.
The dollar's tumble came as European allies, some of the largest holders of U.S. bonds, last week announced investment diversification plans to lessen their entanglement with the U.S. economy following repeated threats by U.S. President Donald Trump to annex Greenland.
While Trump last week ruled out military options, this renewed tariff threats on Canada, France and other trading partners added to uncertainty and to Europe's resolve to diversify away from the United States.
On Tuesday, the European Union announced a free trade agreement with India, which aims to double EU goods exports to the fastest growing large economy by 2032 and reduces tariffs by more than 96%.
Surprising draws to U.S. crude oil and gasoline inventories reported by the American Petroleum Institute late Tuesday lent tepid support to prices, as the small drops in stocks were overshadowed by a 2 million bbl build in distillate fuel oil inventories. Official inventory data from the Energy Information administration is scheduled for 10:30 a.m. EST release today.
An increasingly bellicose White House rhetoric toward Iran added to the geopolitical risk premium propping up oil prices. On Wednesday, President Trump posted on social media that a second "massive armada," larger than the one deployed to Venezuela last month, is heading toward the OPEC member state and said that "time is running out" for a deal. Alluding to the joint U.S.-Israeli strikes on Iranian nuclear facilities, he added that "the next attack will be far worse."
Geopolitical risks were mitigated to some extent by statements from Saudi Arabia and the United Arab Emirates. The region's top U.S. allies and opponents of the regime in Tehran said they would not allow their airspace or land to be used in a military attack against Iran.