Petroleum futures markets were mixed through midday Tuesday, with Crude and RBOB marginally higher while the ULSD contract lagged the complex, putting pressure on the spread of diesel crack.
Further drone strikes from Ukraine on Russian refineries have done little to spur much buying, and markets are largely accepting another hot inflation reading. The dollar has risen slightly, which could also create some headwinds for oil. OPEC also maintained its global growth forecasts unchanged in its monthly oil market report.
After rallying more than 5 cents on Monday, the April RBOB was barely up a cent by midday as the contract peaked at just over $2.60/gallon and was last trading at $2.5905/gallon, which corresponds to an increase of one cent. For contracts covering the second quarter and the summer months, profits of around a cent are quite common.
Spot markets move primarily with futures, but U.S. Gulf Coast gasoline is up nearly 2 cents as discounts narrow slightly with the RVP change.
Crude oil futures may have found a near-term comfort zone, with West Texas Intermediate in a range of around $78 to $80 and Brent in a range of $82 to $84. The April WTI contract rose 50 cents to $78.44/bbl, while the May Brent contract rose 46 cents to $82.67/bbl. WTI has shown some interesting spreads between months. Last week, the April-May WTI spread was close to $1, but at the time of publication the backwardation was around 40 cents.
The ULSD contract is lagging, at least in the first month, as the outer months are flat on both sides.
The sharp decline in April is likely part of the market's backwardation. However, April and May futures are still separated by about 3.5 cents, as April last traded at $2.6391/gallon, down 1.27 cents, and May traded at $2.6033/gallon , which corresponds to a decrease of 0.25 to 0.30 ct.
Weakening ULSD futures and higher crude oil prices have put about a dollar under pressure on the ULSD crack spread.
This content was created by the Oil Price Information Service operated by Dow Jones & Co. OPIS is operated independently from Dow Jones Newswires and The Wall Street Journal.
–Reporting by Denton Cinquegrana, [email protected]; Editing by Michael Kelly, [email protected]
(END) Dow Jones Newswires
March 12, 2024 12:49 ET (16:49 GMT)
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