By Crude oil futures experienced slight gains amid volatile trading on Friday and are poised to register week-to-week increases. However, refined product contracts, particularly gasoline and diesel futures, faced declines.
Concerns surrounding late-winter demand and rising stocks combined with slower U.S. refinery output contributed to the downward trend in diesel futures. As of 11:15 a.m. ET, the Nymex March ULSD contract saw the sharpest decline, dropping by 4.44cts to $2.7793 per gallon. The more active April contract fared slightly better but still slipped by 3.07cts to $2.7343/gal. Since its settlement on February 9, the front-month contract has given up approximately 18cts/gal.
Meanwhile, gasoline futures exhibited mixed movement throughout the day, with the Nymex March RBOB contract edging up by 0.18ct to $2.3201/gal. In contrast, the April RBOB contract dipped by 0.11ct to $2.5641/gal. Similar to ULSD, the April contract garnered greater attention in terms of trading volume. The March contract is likely to conclude the week with a decline of around 2cts/gal.
Oil contracts experienced muted gains, with the Nymex March West Texas Intermediate (WTI) contract set to expire, inching up by 43cts to $78.46 per barrel. The April contract performed slightly better, rising by 24cts to $77.83/bbl. Looking back one week ago, the front-month contract has surpassed the previous settlement by approximately $1.50.
Additionally, April Brent crude recorded an increase of 25cts to reach $83.11/bbl, while the May contract added 19cts and settled at $82.35/bbl. In comparison to the previous week, the April contract has gained approximately $1.
Overall, crude oil futures demonstrate moderate gains, while refined product contracts face declines due to concerns over late-winter demand and rising stocks despite reduced U.S. refinery output.
Inflation Remains a Challenge as Producer Price Index Surprises Analysts
The Labor Department recently released a report stating that the producer price index (PPI) rose by 0.3% in January, a figure almost three times higher than what analysts had expected. As if that wasn’t enough, the Bureau of Labor Statistics also revealed that the consumer-price index (CPI) had increased by 3.1% over the past 12 months, ending in January. These numbers suggest that inflation continues to pose challenges and may result in a delay for the U.S. Federal Reserve’s plans for interest rate cuts.
Fuel Prices Take a Hit Due to Falling Gasoline and Distillate Inventories
Last week, the Energy Information Administration (EIA) reported a decline in both U.S. gasoline and distillate inventories, leading to a significant drop in refined product prices. Interestingly, despite this decrease in supply, U.S. gasoline inventories managed to rise, indicative of refineries operating at just 80.6% of their capacity.
Conflicting Demand Forecasts Disrupt Oil Market Stability
Crude oil prices experienced a surge due to conflicting demand forecasts provided by OPEC+ and the International Energy Agency (IEA). While OPEC forecasted a growth of 2.25 million b/d for 2024 on Tuesday, the IEA contradicted it by stating that global oil demand growth is projected to slow down, with an estimated increase of 1.22 million b/d during the same year.
Reporting by Steve Cronin; Editing by Jeff Barber
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