Oil futures settled higher Friday, lifted by the resurgence of equities and pressure on the US dollar against other major currencies. NYMEX March crude settled 34 cents higher at $61.68/b. Refined product futures settled higher as well Friday, with NYMEX March ULSD up 1.88 cents at $1.9104/gal and NYMEX March RBOB up 1.51 cents at $1.7509/gal.
The latest reading on the US consumer price index earlier this week was above expectations. But the major US stock market averages managed to maintain an upward trajectory that began a week ago.
The Dow Jones Industrial Average was trading roughly 39 points higher at the time of the NYMEX settle at 25,239.
“Stronger stock prices and a weaker dollar both seem to have helped the energy rally this week as inflation fears seem to have subsided temporarily and volatility dropped back to more tolerable levels,” TAC Energy said.
“Nearly all the major currencies have risen at least 2% against the US dollar this week,” BBH analysts said Friday. “The Dollar Index is off 2.3% on the week, which would be the biggest weekly loss since 2015,” they added.
The dollar’s sharp slide, which began in January, paused earlier this month before resuming despite higher yields on US Treasury bonds.
A weaker dollar is seen as a tailwind for oil prices, and helped push crude futures to three-year highs in late January.
With the stock market stabilizing, that relationship between oil and the dollar could reemerge as a key driver.
Statements earlier this week from Saudi Arabia’s energy minister, Khalid al-Falih, reasserting the country’s commitment to addressing global oversupply, were also seen to support prices.
Falih’s remarks helped offset the impact of projections in the International Energy Agency’s latest oil market report that US shale production would outpace global oil demand growth this year.
US production averaged 10.271 million b/d in the week that ended February 9, an all-time high, according to Energy Information Administration data going back to 1983. That was also 1.294 million b/d above a year ago.
Baker Hughes data Friday showed US oil rigs climbing by seven to 798 this week, up from 413 rigs two years ago, with the Permian Basin driving most of those gains.
–Geoffrey Craig, firstname.lastname@example.org
–Jeff Mower, email@example.com
–Edited by Derek Sands, firstname.lastname@example.org