NYMEX Overview: Oil Futures' Plunge Drags Some Markets to Multi-Month Lows -- OPIS
08 January 2024 - 6:01PM
Dow Jones News
Crude futures were sharply lower Monday morning, adding pressure
to refined products that typically see off-season weakness.
Gasoline futures and spot prices were particularly hard hit,
with the largest cash market declines coming in the Midwest.
And while forecasts call for some winter weather across large
parts of the country that could boost distillate demand, traders
appeared to be reluctant to buy until the cold weather arrives.
Crude plunged overnight on word that Saudi Arabia was reducing
its Official Sales Prices in what was regarded as an acknowledgment
of lower global demand.
There is at least for now some psychological support at $70/bbl
for West Texas Intermediate crude, but selling pushed the NYMEX
February WTI contract as low as $70.13/bbl before it recovered
some.
The February WTI contract was down by $3.41 to $70.40/bbl just
ahead of midday. Brent was also under pressure with the March
contract down $3.06 to about $75.70/bbl.
Some of crude's weakness was predictable. The week opened with
rebalancing by large commodity funds the Bloomberg Commodity Index
and the Goldman Sachs Commodity Index.
Citigroup predicted about $2 billion in WTI length may exit both
funds this week. That works out to about 27,000 long positions in
crude.
Bulls have largely been silent this month, though some remain
vocal about oil being cheap.
Former Goldman Sachs' commodity head Jeff Currie appeared on
Bloomberg television Monday morning praising the "set up" for crude
in 2024. Currie said stocks are low, spare capacity is exhausted
and demand is running close to record levels.
He added that market bulls fared so poorly in 2023 that many are
reluctant to take a strong position either way in the new year.
Gasoline prices in some U.S. spot markets were at multi-month
lows Monday morning. Gasoline and ethanol in the Great Lakes states
were both priced at about $1.59/gal and ethanol Renewable
Identification Number credit prices were holding at about 80cts
each.
That puts the hypothetical cost of an E10 blend barely over
$1.50/gal, meaning some retail stations in the region could be
selling gasoline this month for as low as $1.99/gal.
NYMEX RBOB futures sold off with crude and many in the market
expect the Energy Information Administration on Wednesday will
estimate U.S. gasoline demand last week at about 8 million b/d.
Some refiners are reacting to the winter demand slump by looking
to move up turnarounds that had been scheduled for March and April
to this month and the next. Maintenance work on two large crude
distillation units at Motiva's Port Arthur, Texas, refinery may
begin as soon as next week.
The NYMEX February RBOB contract could flirt with a multi-year
low of about $1.97/gal this week. The contract was off 7.31cts to
$2.0324/gal near midday.
A seasonal low in January would break a string of years in which
the annual low was reached in December.
Diesel futures were also softer even though the weather forecast
for the second half of January is somewhat supportive. Heating oil
demand should pick up and remove some product that would otherwise
go into diesel channels.
The NYMEX February ULSD contract was off by 4.45cts to
$2.564/gal just ahead of 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
January 08, 2024 12:46 ET (17:46 GMT)
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