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Oil futures booked gains on Thursday, with U.S. benchmark prices finishing at their highest since February of last year, buoyed by the continuing COVID-19 vaccine rollout and expectations that the Biden administration’s stimulus package will help improve demand for crude.
Risky assets, including crude prices, have benefited from expectations that the stimulus package, which is set to be announced Thursday evening by President-elect Joe Biden, will be “just the beginning of fiscal support he will deliver,” said Edward Moya, senior market analyst at Oanda, in a market update.
“The medium- and long-term fundamentals still look good for oil but if global COVID lockdowns continue to grow, that should disrupt the rally in crude prices,” he said.
West Texas Intermediate crude for February delivery CL.1, +1.30% CLG21, +1.30% rose 66 cents, or nearly 1.3%, to settle at $53.57 a barrel on the New York Mercantile Exchange. Prices for the front-month contract settled at their highest since Feb. 20, according to Dow Jones Market Data.
March Brent crude BRN00, -0.21% BRNH21, -0.21%, the global benchmark, tacked on 36 cents, or 0.6%, to $56.42 a barrel on ICE Futures Europe.
U.S. prices have held ground above the $50 mark for more than a week. Oil traders also eyed the pace of Chinese oil imports, global demand forecasts, and declines in U.S. crude inventories against a backdrop of surging COVID-19 cases.
“Energy shortage fears are spreading across Asia as winter has been relentless across that continent,” Phil Flynn, senior market analyst at The Price Futures Group, wrote in a daily report Thursday.
“Despite concerns of rising cases of Covid and mixed signals on Chinese oil imports, expectations for China oil demand is rising and is poised to move higher,” he said.
China’s crude imports declined to a 27-month low of 9.096 million barrels a day in December, news reports said, though total 2020 imports jumped 7% to 10.86 million barrels a day.
“Chinese refiners are busy trying to refine heating fuels as winter in Asia is brutal this year,” said Flynn. “The demand for fuel is driving up prices and there are reports of some shortages.”
Still the decline in monthly imports sounded “alarm bells,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.
“It is quite possible, just like with base metals, that Chinese traders and refineries imported more crude oil than they needed — partly for strategic storage reasons and partly on speculative grounds — and that imports will therefore slow this year,” he said, in a note.
The Organization of the Petroleum Exporting Countries, in a monthly report released Thursday, left its forecast for world oil-demand growth in 2021 unchanged from its December estimate. The cartel expects crude demand to only partially recover from the 9.8 million barrel decline suffered in 2020 due to the COVID-19 pandemic.
OPEC said it expects demand growth to rise to 95.9 million barrels a day this year, up 5.9 million barrels a day.
In other Nymex dealings Thursday, natural-gas futures settled lower giving up early gains seen in the immediate wake of a larger-than-expected weekly fall in supplies of the fuel reported by the U.S. Energy Information Administration.
Domestic supplies of natural gas declined by 134 billion cubic feet for the week ended Jan. 8, the EIA reported. On average, the data were expected to show a drop of 123 billion cubic feet for the week, according to analysts polled by S&P Global Platts.
February natural gas NGG21, -2.02% fell by 6 cents, or 2.2%, to $2.666 per million British thermal units.
Among the petroleum products, February gasoline RBG21, +0.16% rose 0.3% to $1.5539 a gallon and February heating oil HOG21, +1.04% added 1.3% to $1.6194 a gallon.
