2024.02.0714:18:00UTC+00Canadian Dollar Firms As Oil Extends Gains

The Canadian dollar strengthened against its major counterparts in the European session on Wednesday, as oil prices traded higher for a third consecutive session after the U.S. Energy Information Administration (EIA) said it expects U.S. output to remain largely steady through 2025, easing worries of excess supply.

The EIA said on Tuesday in its latest Short-Term Energy Outlook that the U.S. crude oil production reached an all-time high in December of more than 13.3 million barrels a day but fell to 12.6 million barrels a day in January because of shut-ins related to cold weather.

The Agency expects U.S. oil production to return in February to levels just under the record and drop slightly thereafter for the remainder of the year.

A weaker dollar and cautious optimism regarding U.S. economy's trajectory also supported oil prices ahead the EIA's inventory report due later in the session.

The loonie climbed to a 5-day high of 1.3454 against the greenback and a 2-day high of 110.14 against the yen, off its early lows of 1.3492 and 109.53, respectively. The currency is seen facing resistance around 1.30 against the greenback and 113.00 against the yen.

The loonie recovered to 1.4497 against the euro and 0.8783 against the aussie, from an early low of 1.4524 and a 5-day low of 0.8814, respectively. Next key resistance for the currency may be located around 1.42 against the euro and 0.86 against the aussie.

Looking ahead, U.S. consumer credit for December will be published in the New York session.