OIL FUTURES: RBOB climbs on bullish demand outlooks, pandemic weighs on crude

RBOB futures settled higher Jan. 28 on the back of lower-than-expected US unemployment figures, but pandemic-driven demand growth concerns pushed the rest of the oil complex lower.

NYMEX February RBOB settled up 58 points at $1.5829/gal while February ULSD moved 72 points lower to $1.6017/gal.

The entire oil complex had pulled off overnight lows after US Department of Labor data showed weekly unemployment claims fell 67,000 to 847,000 in the week ended Jan. 23, below market expectations of around 875,000. But the rally quickly faded, and prices fell back to around even.

RELATED: US oil, gas rig count jump 12 to 442; highest since April 2020: Enverus

"The drop in jobless claims was better than forecasts and may be driving a little optimism that the first quarter won't be as bad as feared, given the intense restrictions," OANDA senior market analyst Craig Erlam said in a note.

Several US states have taken steps to ease lockdowns amid an ebb in new cases. New York Governor Andrew Cuomo on Jan. 27 announced that restrictions on nonessential businesses and indoor dining would be lifted across much of the state. The move came on the heels of California on Jan. 25 lifting a regional stay-at-home order that affected a majority of state residents.

The easing restrictions could add a tailwind to gasoline demand that has steadily climbed in recent weeks.

Apple Mobility data showed that US driving activity was higher for a third straight week the week ended Jan. 22, climbing nearly 2% from the week prior and up nearly 3% from a late-December low.

The ICE New York Harbor RBOB crack against Brent was around $10.80/b in afternoon trading, on pace for the highest close since late June. But the crude rally proved unsustainable and futures quickly fell back to negative territory.

NYMEX March WTI settled down 51 cents at $52.34/b and ICE March Brent declined 28 cents to $55.53/b.

While pandemic restrictions were easing in the US, the continued spread of the virus in Europe and Asia pressured crude demand outlooks. Germany was mulling a near-total ban on travelers from several countries facing more contagious variants of the pandemic, including the United Kingdom, Brazil and South Africa.

Meanwhile, authorities in China have called upon citizens to not travel during the Lunar New Year holiday, souring sentiment in the oil markets.

The market also got a fuller view of the impact the pandemic had on the US economy in 2020. US GDP contracted 3.5% in 2020, according to data released by the Commerce Department Jan. 28, the largest slide since 1946.

US drilling count hits nine-month high

The rig count climbed 12 on the week to 442, rig data provider Enverus said. It was the highest count since April 2020, according to the data.

The double-digit uptick telegraphed a changing mindset stemming from higher oil prices, according to Andrew Cooper, quantitative analyst with S&P Global Platts Analytics' Global Supply Team.

"Overall, [this was] another strong week for US rigs, as operators are likely starting to see a mid-$50/b price in 2021 as a possibility which would allow for most of the drilled-but-uncompleted (DUC) wells to be profitable in major crude plays and a large portion of new wells to be able to breakeven," Cooper said.