Refined product futures retreated from early gains and were clinging to small increases at midday Tuesday. Crude contracts also pulled back. Trading was reasonably strong based on volume estimates and appears to be in consolidation mode as traders continue to digest last week’s voluntary production cuts from OPEC+ members.
Over the past several trading sessions, the West Texas Intermediate contract has seen a little more contango developing through the first quarter, suggesting that supplies appear to be comfortable. Brent also has begun to show a bit of the same structure.
The WTI contango through May and that contract is priced at about a 50ct premium to the NYMEX January WTI contract. The January contract rose to morning high of $74.10 a barrel, but was posting more modest gains by midday. WTI has traded in a roughly $2 range so far on Tuesday and was up just over 50 cents to $73.56/bbl as of 11:50 a.m. ET.
February Brent has also given back most of the morning’s dollar-plus gains. February Brent was 31 cents higher at $78.34/bbl near midday, while March was about even with February.
Brent’s nearly $5 premium to WTI is likely to continue to support U.S. crude exports. Trade sources said they expect Wednesday’s oil export data from the Energy Information Administration could approach record levels.
Gasoline and distillate futures, which were at times Tuesday morning posting gains of more than 3 cents/gal, were mostly unchanged as midday approached.
The NYMEX January RBOB contract reached a morning high of $2.1662, but fell back to trade down 0.18 cent to $2.1324/gal just before noon. The small paper declines have moved through the East of the Rockies spot markets, while the West Coast markets are posting some sizeable increases, most notably in Los Angeles, where cash gasoline prices are nearly 10 cents higher as premiums to the screen have widened on reports of flaring at Marathon Petroleum’s Los Angeles refiner.
The NYMEX January ULSD contract also backed off early gains and at midday was mostly unchanged at $2.6602/gal.
There is some lower-priced diesel coming from Gulf Coast refineries, where the product is approaching a 30-cent discount to the front-month ULSD contract.
Prompt Gulf Coast diesel was pricing about 34 cents/gal below New York Harbor quotes. The cost of line space on Colonial’s distillate line remains at 13.5 cents over tariffs.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
–Reporting by Denton Cinquegrana, [email protected]; Editing by Jeff Barber, [email protected]
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