Oil Surges 3% on Russia Sanctions, Biggest Jump Since July


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures jumped 3% on Thursday (1/8), their most 
in a day since July, driven by White House approval for new sanctions on 
Russian oil. A weekly draw in U.S. crude inventories also helped the market 
claw back most of the losses from the prior two sessions that had been 
triggered by concerns over Venezuela's oil sector.

   Data showing the smallest U.S. trade deficit in 17 years -- along with 
expectations that the Friday (1/8) release of U.S. jobs numbers for December 
could prompt the Federal Reserve to consider a rate cut later this month -- 
added to the bullish sentiment.

   The rally got off to an early start on news that U.S. President Donald Trump 
had approved a bipartisan Senate bill to impose sanctions on buyers of Russian 
oil, including China and India, in bid to further restrict the Kremlin's energy 
revenues over the Ukraine war.

   Data from Wednesday (1/7) by the Energy Information Administration showing 
U.S. commercial crude stocks declining by a combined 5.7 million bbl over the 
past two weeks was a catalyst as well to the early run-up in oil.

   Market momentum picked up after the U.S. Bureau of Economic Analysis 
reported the October trade balance at $29.4 billion versus Wall Street's 
forecast of $58.9 billion. Analysts noted that it was the smallest deficit 
since 2009.

   Futures markets have priced in a 90% probability that the Fed will hold U.S. 
rates steady in a range of between 3.5% and 3.75% at its January 28 policy 
decision. But some economists say the central bank might consider another 
25-basis point cut this month, like it did three times last year, if the U.S. 
unemployment rate hits a four-year high of 4.7% in Friday's jobs data.

   The NYMEX WTI contract for February delivery settled up by $1.77, or 3.2%, 
at $57.76 bbl. It was the highest percentage rise for a front-month contract in 
U.S. crude since July 29.

   ICE Brent for March delivery closed up by $2.03, or 3.4%, at $61.99.

   RBOB futures for February climbed by $0.0738 to $1.7929 gallon while the 
front-month ULSD for February advanced by $0.07473 to $2.1314.

   The U.S. Dollar Index rose by 0.283 points to 98.705 against a currency 
basket.

    




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