Crude At 4-Mo High as US Dollar Trades Near 4-Yr Low


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil prices edged higher Wednesday (1/28) morning as the U.S. 
dollar continued to weaken. Front-month Brent and WTI futures traded at their 
highest since September, while the U.S. dollar index fell to its lowest in 
nearly four years.

   WTI futures for March delivery rose $0.68 to $63.07 bbl, and ICE Brent for 
March delivery advanced $0.54 to $68.11 bbl.

   Downstream, NYMES RBOB futures for February delivery added $0.0203 to 
$1.8855 gallon, while ULSD futures edged up $0.0022 to $2.6484 gallon.

   The U.S. dollar index edged up 0.054 points to 96.105 following yesterday's 
0.8-point slip. The index slipped by more than 2.5 points in the last four 
trading sessions to its lowest since February 2022, lending support to 
commodities priced in that currency.

   The dollar's tumble came as European allies, some of the largest holders of 
U.S. bonds, last week announced investment diversification plans to lessen 
their entanglement with the U.S. economy following repeated threats by U.S. 
President Donald Trump to annex Greenland.

   While Trump last week ruled out military options, this renewed tariff 
threats on Canada, France and other trading partners added to uncertainty and 
to Europe's resolve to diversify away from the United States.

   On Tuesday, the European Union announced a free trade agreement with India, 
which aims to double EU goods exports to the fastest growing large economy by 
2032 and reduces tariffs by more than 96%.

   Surprising draws to U.S. crude oil and gasoline inventories reported by the 
American Petroleum Institute late Tuesday lent tepid support to prices, as the 
small drops in stocks were overshadowed by a 2 million bbl build in distillate 
fuel oil inventories. Official inventory data from the Energy Information 
administration is scheduled for 10:30 a.m. ET release today.

   An increasingly bellicose White House rhetoric toward Iran added to the 
geopolitical risk premium propping up oil prices. On Wednesday, President Trump 
posted on social media that a second "massive armada", larger than the one 
deployed to Venezuela last month, is heading toward the OPEC member state and 
said that "time is running out" for a deal. Alluding to the joint U.S.-Israeli 
strikes on Iranian nuclear facilities, he added that "the next attack will be 
far worse".

   Geopolitical risks were mitigated to some extent by statements from Saudi 
Arabia and the United Arab Emirates. The region's top U.S. allies and opponents 
of the regime in Tehran said they would not allow their airspace or land to be 
used in a military attack against Iran.




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