February is typically a period of strong steering currents for petroleum futures. However, Monday morning’s trading seemed to be stuck in the midwinter doldrums, as crude prices remained largely unchanged while refined products experienced a modest increase.
Over the weekend, another Russian refinery fell victim to a drone attack, adding to the ongoing challenges in global shipping due to the avoidance of the Suez Canal.
Although refined product values in Europe have seen a rise, this hasn’t translated into a boost for crude prices. With more than 5 million barrels a day of global refining capacity still sidelined due to planned and unplanned maintenance, buyers of crude oil seem to be exercising patience.
At midday on Monday, the April Brent contract held steady at $77.33 per barrel (bbl), while the NYMEX March West Texas Intermediate contract dipped by 8 cents to $72.20/bbl.
Notably, diesel is the product that is expected to receive the most support due to refinery downtime and attacks on Russian infrastructure. With freight rates from the Arab Gulf to Northwestern Europe sitting around 35 cents per gallon, distillate supplies remain relatively tight on the European continent.
Throughout the morning, NYMEX ULSD futures were typically 1-2 cents per gallon higher, with the March contract up by 1.83 cents to $2.6783/gal. Similarly, U.S. spot distillate prices saw a similar increase. However, buying interest may be dampened by a warm weather forecast for February.
In contrast, the NYMEX March RBOB contract rose by 1.44 cents per gallon to $2.1619/gal. Most U.S. spot prices were approximately 1 cent higher across various markets, except for the Group 3 market where cash prices were about 7 cents per gallon higher. The Chicago market, on the other hand, experienced a decline of 4.5 cents per gallon due to speculation that operations at BP’s Whiting, Ind., refinery have returned to normal.
