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Oil snaps 6-day winning streak as U.S. dollar rises, product inventories build

MarketWatch logo MarketWatch 1/13/2021 William Watts
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FUTURES MOVERS

Oil futures ended lower in a choppy session, snapping a six-day winning streak for the U.S. benchmark, after the U.S. dollar gained ground and inventories of gasoline and distillates rose more than expected.

West Texas Intermediate crude for February delivery fell 30 cents, or 0.6%, to $52.91 a barrel on the New York Mercantile Exchange. WTI’s six-day winning streak was the longest since May, according to Dow Jones Market Data.

March Brent crude the global benchmark, fell 52 cents, or 0.9%, to close at $56.06 a barrel on ICE Futures Europe. Both benchmarks finished Tuesday at their highest since Feb. 21.

“The decline came just as WTI hit its highest level in around a year, which may have contributed to some profit-taking,” said Craig Erlam, senior market analyst at OANDA. “Near-term risks remain for oil markets, with COVID causing huge problems in many countries which means we’re likely to see more restrictions for longer.”


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The Energy Information Administration said U.S. crude inventories fell by 3.2 million barrels last week, slightly less than the 3.8 million barrel drop expected by analysts surveyed by S&P Global Platts. It was also smaller than the 5.8 million fall said to be reported by the American Petroleum Institute late Tuesday.

Gasoline inventories increased by 4.4 million barrels last week, according to EIA, while distillate stocks rose 4.8 million barrels. The S&P Global Platts analysts had forecast a 3.2 million barrel rise in gasoline stocks and a 2.8 million barrel rise in distillate inventories.

The overall trend for supply, and oil production, “still is on a downward trajectory,” said Phil Flynn, analyst at Price Futures Group, in a note. “The oil market trend towards our near-term target of $55 is intact and while we may see a pullback from that area, this summer, prices will be much higher.”

The U.S. dollar was on a firmer footing Wednesday, with the ICE U.S. Dollar Index a measure of the currency against a basket of six major rivals, up 0.3%. The dollar fell sharply in 2020 and extended losses into January, trading at levels last seen in April 2018. Commodities often show an inverse correlation to the dollar.

February natural-gas futures fell 2.6 cents, or 0.9%, to $2.727 per million British thermal units.

February gasoline dropped 0.42 cent, or 0.3%, to end at $1.5488 a gallon, while February heating oil rose 0.22 cent, or 0.1%, to finish at $1.5989a gallon.

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