Petroleum futures were modestly lower at midday Tuesday after bouncing off sharper, early morning declines.
Ahead of the extended U.S. Memorial Day weekend, there are few signs that gasoline demand will match or exceed the year-ago level.
The Nymex June RBOB fell to as low as $2.49/gal in early trading, but recovered to $2.5234/gal at midday, down 1.65cts from Monday settlement.
U.S. spot gasoline markets were weaker than futures, with Gulf Coast prices down by 3.5cts/gal and values in Northern California off by as much as 8cts/gal. The West Coast is about to see an increase in refinery utilization as heavy second-quarter maintenance work in California and Washington is close to wrapping up.
The declines in Northern California spot gasoline prices have been sizable. San Francisco Carbob, for example, reached a 2024 high of $3.6386/gal on April 3. Prices at midday were barely above $2.68/gal, approaching a $1/gal drop over the last six weeks.
OPIS volume surveys suggest U.S. motor fuel demand remains unexceptional. The surveys show gasoline demand rose in the week ended May 10, but the increase was less than 1%. It's likely the Energy Information Administration on Wednesday will report another demand estimate below 9 million b/d for the week ended Friday.
The NYMEX June ULSD contract was down by 1.07cts to $2.4764/gal and the market doesn't appear concerned with lower distillate supply from Russia. Ukrainian drone attacks on Russian refineries and infrastructure have become a somewhat regular occurrence, but have not raised much concern in the market because of typically weak seasonal demand.
Crude oil futures at one point Tuesday morning were off by as much as $1.50/gal, but buyers stepped in when West Texas Intermediate prices approached $78/bbl and Brent struggled to hold at $82.10/bbl.
The soon-to-expire NYMEX June WTI contract narrowed its losses to 60cts by midday, leaving it at $79.20/bbl. The July Brent contract was 70cts lower at $83.01/bbl.
The crude market appears a bit sloppy. There are unsold West African cargoes of sweet crude that are pegged well below Brent prices. In addition, the backwardation in the market has narrowed considerably, suggesting supply is not a concern.
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
05-21-24 1232ET
