By Crude oil and refined product futures took a sharp downturn earlier today, although the front-month contracts managed to rebound from their initial lows.
The market has been influenced by several factors, including an unconfirmed report of a possible ceasefire between Israel and Hamas, as well as a strong U.S. jobs report that has bolstered the dollar. These developments have added pressure to the futures market.
According to Elaine Levin, president of brokerage Powerhouse, there has been ongoing speculation about a potential deal since last Sunday. While the tweet from Al Jazeera has been retracted, Levin believes that it does not indicate the end of the deal.
Amidst continuing talks between the involved parties, some pre-weekend liquidation is expected in the market.
Although there has been aggressive selling in NYMEX West Texas Intermediate (WTI) futures in recent sessions, there has been a growing interest in these contracts. The total open interest has consistently risen for the past 10 sessions, reaching a nearly four-month high as of Thursday. During this period, the front-month contract experienced both ups and downs in terms of price movement.
The March WTI contract initially dropped to $71.79/bbl in early Friday trading but has since recovered slightly to $72.22/bbl near midday. This has resulted in a marginal contango between the March and April contracts. Similarly, Brent saw a rise from its morning low of $76.85, but remained down by approximately $1.50 at $77.25/bbl near midday.
While refined product futures also recovered from their morning lows, they remained in negative territory.
NYMEX March ULSD Contract Sees a Dip
The NYMEX March ULSD (Ultra-Low Sulfur Diesel) contract experienced a decline, dropping about 7 cents to reach $2.6404 per gallon. However, it still managed to stay around 1.5 cents higher than the morning low.
Distillate Discounts Narrow in Group 3
In contrast to most cash markets, there was a narrowing of distillate discounts in Group 3, with a reduction of 15 cents observed on Friday morning. As a result, the implied price saw an increase of approximately 8.5 cents per gallon by midday. Even with this adjustment, prices in the Midwest market remained the most affordable across the country.
NYMEX March RBOB Contract Decreases
The NYMEX March RBOB (Reformulated Blendstock for Oxygenate Blending) contract took a dip of 5.38 cents, settling at $2.141 per gallon. The April contract experienced a similar decline. Consequently, the spread between high and low RVP (Reid Vapor Pressure) futures remained over 23 cents per gallon.
Support for Gasoline Prices in Chicago Market
Although spot gasoline prices in the Chicago market also decreased, the decline was not as significant compared to other markets East of the Rockies. This is primarily due to the support provided by Thursday’s power outage at BP’s Whiting refinery in Indiana, which has a capacity of 440,000 barrels per day. While BP confirmed that power had been restored on Friday, production at the facility is expected to resume only after a few days.
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