Oil Price Fundamental Daily Forecast – Prices Hit 9-Month High on EIA Draw, Vaccine Rollout, Fiscal Stimulus

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures reached a nine-month high early Thursday after government inventories data showed a drop in U.S. crude stockpiles last week, while progress toward a U.S. fiscal stimulus deal and strong Asian demand also bolstered prices.

At 12:05 GMT, February WTI crude oil futures are trading $48.19, up 40.19 or +0.40%. February Brent crude oil is at $51.24, up $0.16 or +0.31%.

A weaker U.S. Dollar is also helping to boost foreign demand for dollar-denominated crude oil. The greenback hit a 2-1/2 year low overnight against a basket of major rivals.

Energy Information Administration Weekly Inventories Report

U.S. crude stocks fell while gasoline and distillate inventories rose, the EIA said on Wednesday.

Crude inventories fell by 3.1 million barrels in the week to December 11 to 500 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.9 million-barrel drop.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 198,000 barrels in the last week, EIA said.

Refinery crude runs fell by 253,000 barrels per day in the last week, EIA said. Refinery utilization rates fell by 0.8 percentage points, in the week.

U.S. gasoline stocks rose by 1 million barrels in the week to 238.9 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for 1.6 million-barrel rise.

Distillate stockpiles, which include diesel and heating oil, rose by 167,000 barrels in the week to 151.3 million barrels, versus expectations for an 886,000-barrel rise, the EIA data showed.

Net U.S. crude imports fell by 1.85 million barrels per day, EIA said.

Stimulus Hopes Raising Demand Expectations

U.S. congressional negotiators were haggling on Wednesday over details of a $900 billion COVID-19 aid bill that is expected to include $600-$700 stimulus checks and extended unemployment benefits, as a Friday deadline loomed, lawmakers and aides said.

Asia Distillates-Jet fuel Cracks Strengthen Further, Cash Discounts Widen

Asian refining margins for jet fuel hit their highest in more than nine months on Thursday, supported by a slow but steady recovery in aviation demand.

Daily Forecast

The price action indicates investors are optimistic about the outlook for fuel demand despite reports from OPEC and the IEA earlier in the week calling for lower than expected demand. The rollout of the vaccines and hopes for more U.S. fiscal stimulus remain the main price drivers, while the economic recovery in Asia is an added bonus.

For a look at all of today’s economic events, check out our economic calendar.