Crude oil and gasoline futures rebounded at midday on Thursday, as bargain hunters stepped back into the market after two consecutive days of significant declines. However, ULSD contracts continued to face challenges, despite low inventories in the United States and the approaching high-demand winter heating season.
ULSD Contracts Struggle Despite Favorable Factors
The December NYMEX ULSD contract experienced a decline of 2.98cts, reaching $2.7194/gal as of 11:45 a.m. ET. During the morning session, the contract traded within a wide range, hitting a low of $2.6960 and a high of $2.7628/gal. The January contract, which saw increased activity, was down by 2.12cts to $2.6765/gal.
RBOB Contract Sees Volatility, but Shows Improvement
The front-month RBOB contract witnessed a range of 7cts between its morning high and low. It managed to climb by 4.44cts to $2.1729/gal, around 2cts shy of the morning peak. The January contract also attracted attention, rising by 3.04cts to $2.141/gal.
NYMEX West Texas Intermediate Contracts Experience Modest Gains
The NYMEX December West Texas Intermediate contract rose by 63cts to reach $75.96/bbl, indicating a decrease of approximately $1.30 from its morning high. Meanwhile, the January contract recorded a gain of 59cts, closing at $75.90/bbl.
European Benchmark Brent Crude Demonstrates Slightly Stronger Performance
European benchmark Brent crude experienced slightly stronger gains compared to West Texas Intermediate. The January contract surged by 76cts to $80.30/bbl, while February prices also saw an increase of 72cts, reaching $80.13/bbl.
Overall, the market witnessed a resurgence in crude oil and gasoline futures as bargain hunters took advantage of the recent decline. Despite struggling ULSD contracts, other segments displayed signs of improvement, albeit with varying degrees of volatility.
Crude Prices Experience Significant Decline
Over the past two days, crude prices have taken a considerable hit, plummeting by more than $5 per barrel. Additionally, RBOB contracts have shed more than 11 cents per gallon, while ULSD contracts have experienced a retreat of over 20 cents.
Impact of Data Delay on Market Operations
This week, market operations have been devoid of crucial production, demand, and inventory data from the U.S. Energy Information Administration. The delay in releasing this information stems from a system upgrade. However, the American Petroleum Institute did provide some insights on Tuesday, reporting a substantial build of nearly 12 million barrels in U.S. crude inventories, alongside a smaller increase in distillate stockpiles.
Lingering Concerns Surrounding Demand
One of the key concerns hanging over the market is the issue of demand. According to OPIS data, volumes sold by U.S. gas stations in 2023 are trailing behind the levels seen in 2022 by over 3%.
Spot Gasoline and Diesel Prices
Midday observations indicate higher spot gasoline prices, which align with the uptick in futures. Conversely, spot diesel prices have shown a decline, particularly in Los Angeles where prices dropped by more than 10 cents per gallon.