Oil Futures Fade Gains as USD Cuts Loss on Better Economy
WASHINGTON, D.C. (DTN) -- Crude and refined products futures on the New York
Mercantile Exchange and Brent crude on the Intercontinental Exchange trimmed
overnight gains to settle Thursday's session shallowly mixed as the U.S. dollar
index pared losses after falling to a seven-week low at 89.675 after
better-than-expected data for jobless claims and consumer spending indicated
the economy's fundamentals continued to improve in the first quarter.
The U.S. dollar index, which tracks the greenback against six global peers,
ended the session above 90.00 at 90.135 and strengthened in afterhours trade,
pressuring oil futures. The greenback edged off the February low after weekly
unemployment claims fell last week to the second lowest level since the onset
of the pandemic at 730,000, with large states of California and Ohio behind the
The decrease in jobless applications coincides with expanded vaccination
efforts, giving Americans confidence the pandemic will end while hiring is
picking up. The United States has administrated over 65 million doses since the
onset of the vaccination program on Dec. 14, 2020, placing the Biden
administration well ahead of its goal of 100 million vaccinations in his first
hundred days as president. The rate of new infections and hospitalizations
declined sharply since its winter peak, prompting some health officials to
suggest the country has finally turned the corner in this pandemic.
Further spurring gains for the greenback, durable goods orders, a subset of
retail sales, jumped above expectations to 3.4% in January, suggesting
consumers are still willing to dig into their wallets even as the unemployment
rate remains high. Durable goods orders increased by the most since June 2020
when the economy first emerged from a nationwide lockdown, unleashing pent-up
demand from weeks of quarantine in spring. These data points bode well for the
economy's rebound for the second and third quarters.
Analysts note fiscal relief paired with widespread vaccinations and
prospects of infrastructure spending later this year should further support
business activity in the months ahead. The Atlanta Federal District Bank's
GDPNow model upgraded its first quarter forecast for U.S. gross domestic
product to 9.5% as of Feb. 18, up from 4.5% seen earlier this year.
The Bureau of Economic Analysis in its second of three estimates released
this morning nudged up real gross domestic product for the U.S. economy in the
fourth quarter 2020 by 0.1% for annualized growth of 4.1%.
On the session, West Texas Intermediate futures for April delivery added
31cts to finish at $63.53 bbl and front-month Brent futures on ICE slipped
16cts below $67 bbl ahead of expiration Friday afternoon. May Brent maintained
its discount to the April contract at 77cts in afternoon trade, settling the
session at 66.11 bbl. NYMEX March ULSD futures settled little changed at
$1.9066 gallon, with the April contract ending at an 0.87cts discount to the
front month ahead of Friday's March contract expiration. Front-month RBOB
futures softened to $1.8923 gallon, while the April contract settled at a steep
8.41cts premium, reflecting the transition to lower Reid vapor pressure
gasoline specifications next week.
Liubov Georges, 1.646.359.4088, firstname.lastname@example.org, http://www.dtn.com
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