New York — Crude futures pushed to 11-month highs Jan. 12 on the back of a weaker US dollar.
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NYMEX February WTI settled 96 cents higher at $53.21/b, and ICE March Brent climbed 92 cents to finish at $56.58/b.
The reversal of US dollar futures in early US trading breathed fresh life into an overnight oil price rally that was showing signs of slowing. The ICE US Dollar index surged to a session-high 90.68 in early trading but pulled back was holding at around 90.055 in midafternoon, on pace to close below the three-week high seen Jan. 11 of 90.442.
Front-month Brent was up 1.7%, while front-month WTI climbed 1.8% on the day to settle at the strongest since Feb. 21 and Feb. 24, respectively.
NYMEX February RBOB settled 3.22 cents higher at $1.5530/gal, and February ULSD was up 2.32 cents at $1.5967/gal.
Oil prices had been trending higher overnight amid expectations tightened supply and demand balances in 2021.
Saudi Arabia's announcement last week it would make voluntary cuts of 1 million b/d in February and March was the key factor supporting oil prices, analysts said.
"We expect that the oil market will draw down inventories throughout 2021, as demand continues to make a recovery," analysts at ING said in a note Jan. 12. "The key risk was around 1Q 2021, but OPEC+ has addressed this with its recently revised deal."
OPEC and its allies raised their crude oil production by 280,000 b/d in December to a seven-month high, as Libya pumped its most since mid-2013 and several other countries posted modest increases, the latest S&P Global Platts survey found Jan. 11.
Combined, the entire coalition's conformity level was 98.5%, down from 100.1% in November, according to Platts calculations.
The market also pointed to an expected stimulus package from US President-elect Joe Biden that could help support the energy market's recovery by boosting the US economy. Biden is expected to unveil his proposals Jan. 14, which he said would contain "trillions of dollars" of stimulus.
The US Energy Information Administration revised its crude price forecast higher in its in its monthly Short-Term Energy Outlook released Jan. 12 amid tightened supply outlooks and upward trending demand projections.
The EIA now expects Brent crude prices to average at around $52.75/b in 2021, up $4.25/b from its December forecast, and at $53.42/b in 2022, and the WTI spot price to average at around $49.75/b in 2021, up $4/b from its most recent report, and at $49.79/b in 2022.
The upward revision comes amid a tighter global supply outlook spurred in large part by the Saudi production cuts. OPEC production is now expected to average at 27.2 million in 2021, EIA said, a downward revision of 300,000 b/d from its December forecast.