Crude and refined product futures were consolidating Monday after last week's run higher and a weekend that included no increase in hostilities in the Mideast and Ukraine's war with Russia.
Meanwhile, various assessments of OPEC+ that suggest member countries are making good on only 40% to 50% of promised production cuts, may be dissuading buyers from chasing crude oil benchmarks.
The NYMEX March West Texas Intermediate contract near midday was barely changed with less than $1.50/bbl separating the morning's highs and lows. A lack of committed selling left prices holding close to Friday's $76.85/bbl settlement. Brent saw a similar lack of enthusiasm with the April contract down 50cts to $81.69/bbl.
Refined products are providing refiners with some of the largest margins since summer and that has reduced the risk of buying crude, as crude processors face little risk in paying $80/bbl or more for crude when gasoline and distillate prices are in the $100-$117/bbl neighborhood.
While distillate futures have had a strong run of late, the NYMEX March ULSD contract was down 5.77cts/gal to $2.9065/gal ahead of midday. Even with that dip, diesel is fetching more than $45/bbl above WTI, hearkening back to some of the windfall profits witnessed in the early months of the Ukraine War.
There is some clear profit-taking Monday, with prices in U.S. spot markets down 5-6cts/gal and prices could slip by another 10cts or more without sapping the motivation to restart idle refining capacity.
Gasoline is about two weeks away from the typical March runway when prices typically rise on refinery downtime and the shift to summer blends.
The NYMEX March RBOB contract was up just 0.24cts to $2.3419/gal. And with about 5 million b/d of global refining capacity offline for maintenance, worries about too much winter gasoline are fading.
While Midwest spot gasoline prices were down by 0.5-2cts/gal, prices in spot markets were modestly higher.
Market sources believe the Energy Information Administration on Wednesday will report a drop in demand thanks mostly to the atmospheric rivers that reduced consumption last week in western states.
Soybean oil's premium to heating oil futures weakened to about 60cts/gal. The narrower the spread, the greater the downward pressure on Renewable
Identification Number credits. Biomass-based diesel D4 RIN credits were down to 53.75cts each, while ethanol-related D6 RINs were at 52.75cts each near midday.
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 Tom Kloza, tkloza@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
02-12-24 1238ET
