Crude oil and RBOB futures prices were rising Tuesday, resuming their upward momentum following losses on Monday, while diesel prices dropped.
The gains come as the U.S. has threatened to reimpose sanctions that would crimp Venezuelan exports and reports that Saudi Aramco was shelving plans to increase oil output in coming years--though neither bit of news will have an immediate impact on oil output.
U.S. crude prices were seeing gains of more than $1/bbl, with the NYMEX March West Texas Intermediate crude contract rising $1.15 to $77.93/bbl, placing prices within pennies of the day's highs. The April contract was $1.10 higher to $77.77/bbl. European benchmark Brent crude was seeing more subdued gains, with the March Globex contract increasing 69cts to $83.09/bbl while the more-active April contract was 78cts higher to $82.61/bbl.
Action in refined products was also focused on the next-month contracts as the end of January approaches. March RBOB was 2.15cts ahead to $2.2861/gal, about half a cent off session highs, while February prices rose 2.38cts to $2.2523/gal.
ULSD contracts were bucking the upward momentum and were heading for a second day of declines, with March prices falling 1.69cts to $2.7797/gal while February prices shed 2,03cts to $2.8136/gal.
The ULSD losses come amid concerns about Chinese energy demand as the country's economy faces ongoing problems in the real estate sector following a court ordering the liquidation of China Evergrande Group. Failure of the real estate giant threatens to send ripples throughout the country's economic sector.
Counterbalancing those concerns are Saudi Aramco's announcement that it would maintain a maximum capacity of 12 million b/d and shelve plans to increase output to 13 million b/d by 2027. The move is seen more as an acknowledgement of the growth of U.S. output and not as much a signal of concerns about global energy demand.
Also on Tuesday, the U.S. State Department said the Biden administration would not renew a license providing sanctions relief to Venezuela's oil and gas sector when it expires on April 18. The easing of sanctions was part of a deal worked out with Venezuelan President Nicolas Maduro to ensure fair elections there. The decision to reimpose penalties comes following the arrest of members of Venezuela's opposition and the barring of candidates from the upcoming presidential election, the State Department said.
Gasoline prices in spot markets around the country were rising, with large gains being seen in San Francisco and Los Angeles markets as the seasonal shift to summer blend specifications approaches.
Renewable Identification Number prices were seeing strong gains, with both D6 ethanol RINs and D4 biodiesel RINs rising by 2.5cts following 13 days of losses.
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 Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
01-30-24 1252ET
