New York—Crude oil futures edged higher Jan. 7 amid tightened fundamental outlooks, but pandemic demand risks and heightened US political tensions limited gains.
NYMEX February WTI settled 20 cents higher at $50.83/b and ICE March Brent was up 8 cents at $54.38/b."Market strength this week seems to be from the Saudi cuts, along with decent data out of US inventories showing a drawdown in crude oil supplies," Price Futures Group senior market analyst Phil Flynn said.
Data released Jan. 6. by the Energy Information Administration showed a sizable 8.01 million-barrel draw on US crude stocks for the week ending Jan. 1. The larger-than-expected draw came on the heels of Saudi Arabia announcing at the end of the Jan. 5 OPEC+ meeting that it will voluntarily slash its February and March crude production by 1 million b/d.
NYMEX February RBOB settled 77 points higher at $1.4827/gal and February ULSD climbed 94 points to $1.5381/gal.
But the price rally was capped by pandemic-related demand concerns and US political uncertainty, analysts said.
"The short-term crude demand outlook continues to deteriorate now that virus concerns have returned to Asia," OANDA senior market analyst Edward Moya said in a note. "Vaccine rollouts have disappointed, but that is being offset by positive news that more vaccines appear poised to get the greenlight."
Chinese authorities placed 11 million people under lockdown Jan. 7 after 100 new coronavirus cases were reported in Shijiazhuang, according to media reports.
Economic mobility in Europe's biggest economies slumped to the lowest level since mid-May in the week to Jan. 3, according to Google data, following the latest wave of curfews, lockdowns, and travel restrictions to curb surging coronavirus cases.
Based on activity at workplaces, retail and recreational sites, and transport hubs, average mobility indexes in France, Germany, Italy, Spain and the UK were 52.1% below pre-crisis levels in the week, according to Google data, compared with 47.6% below in the previous week.
"There is still some uncertainty on the shutdowns that's keeping us balanced here, and momentum was slowed a bit by chaos in Washington," Flynn said.
Democratic leaders in both the House of Representatives and Senate have called for the removal of President Donald Trump from office a day after rioters stormed the US Capitol building in Washington, DC.
