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Oil futures traded modestly lower Thursday, with crude set to end 2020 down by more than 20% for the year that saw demand slammed by the COVID-19 pandemic which restricted travel and business and consumer activity.
West Texas Intermediate crude for February delivery CL.1, -1.03% was down 43 cents, or 0.9%, to $47.97 a barrel on the New York Mercantile Exchange early Thursday. March Brent crude BRNH21, -1.10%, the global benchmark, was down 50 cents, or 1%, at $51.13 a barrel on ICE Futures Europe.
However, WTI was on track for a monthly rise of 5.8%, while Brent has gained more than 6% this month.
“With the current level of global lockdowns appearing to be little more than a speed bump for oil markets, traders look set to ride the vaccine wave of economic optimism into 2021,” said Stephen Innes, chief global markets strategist at Axi, in a note.
Through Thursday’s close though, WTI was on track for a 20.7% fall in 2020 based on front-month contracts, its biggest annual decline since 2018 and its second annual fall in three years, according to Dow Jones Market Data. Still, the U.S. benchmark staged a significant rebound from an unprecedented fall that saw an oil futures contract trade — and close — in negative territory for the first time ever in March.
See: Why oil prices aren’t expected to see a quick recovery from a more than 20% loss in 2020
Brent crude was on track for a 22.2% annual fall, its largest since 2015.
Crude was buoyed Wednesday by a larger-than-expected drop in U.S. crude inventories, as well as renewed weakness in the U.S. dollar. The ICE U.S. Dollar Index DXY, +0.03%, a measure of the U.S. currency against a basket of six major rivals, was off slightly on Thursday, a day after sliding to 2 1/2-year low.
A weaker dollar is typically seen as a positive for commodities priced in the U.S. unit, making them cheaper to buyers using other currencies. Expectations for a lower trend for the dollar have boosted expectations among bulls for further gains for crude and other commodities in 2021.
Read: How a weaker dollar could help fuel a commodities boom in 2021
Weekly natural-gas storage data is due later Thursday from the Energy Information Administration. Analysts surveyed by S&P Global Platts expect the report to show a withdrawal of 123-billion cubic feet for the week ended Dec. 25.
February natural-gas futures NGG21, +3.47% fell 0.9% to $2.422 per million British thermal units.
January gasoline RBF21, -0.48% fell 0.5% to $1.4052 a gallon, while January heating oil was off 1.3% at $1.47 a gallon.
