Crude climbs amid tightened supply outlook, weaker dollar

New York — Oil futures settled higher Jan. 19 amid a tightened global supply outlook and a weaker dollar.

NYMEX February WTI settled 56 cents higher at $52.98/b and ICE March Brent was up $1.15/b at $55.90/b.

The International Energy Agency in its monthly oil market report released Jan. 19 cut its estimate of the recovery in global oil demand this year to 5.5 million b/d, citing renewed COVID-19 lockdowns and the scale of the global vaccination challenge.

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But the 240,000 b/d downward demand revision was more than matched by expectations that OPEC oil production in 2021 would fall 300,000 b/d to 27.7 million b/d.

NYMEX February RBOB settled 97 points higher at $1.5381/gal and February ULSD climbed 58 points to $1.5987/gal.

The crude structure turned more bullish amid the supply outlook. Second-month WTI settled at parity to the front month, closing a contango at the front end of the curve that has persisted since July 21. Meanwhile, backwardation returned at the front end of the Brent curve, with second-month Brent settling at a 6 cent/b discount to front month.

But gasoline cracks were trending off recent highs. The front-month ICE New York Harbor RBOB crack versus Brent edged down to $8.69/b in afternoon trading from a close of $9.02/b on Jan. 18.

Meanwhile, the ICE US Dollar Index was holding at around 90.49 in afternoon trading, down more than a quarter point from the session prior.

Janet Yellen, US President-elect Joe Biden's nominee to run the Treasury Department, pushed for a robust fiscal stimulus package during a Senate confirmation hearing Jan. 19. Biden had outlined a $1.9 trillion stimulus package proposal in the week ended Jan. 16, stressing that a bold investment was needed to jump start the economy and accelerate the distribution of vaccines.