Crude Oil Contracts on Track for Strong Weekly Gains despite Friday’s Losses

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Despite experiencing losses on Friday, crude oil and refined product contracts are still expected to end the week with notable gains.

Inflation Slowdown Overshadowed by Losses

Earlier in the morning, the Commerce Department released data showing a slowdown in inflation towards the end of last year. However, this positive development did not prevent the market from experiencing losses.

Crude Contracts Take a Hit

At around 11:45 a.m. ET, crude contracts were on a downward trend, with the March NYMEX contract for West Texas Intermediate (WTI) crude dropping by 92 cents to $76.44 per barrel. Similarly, April prices fell by 90 cents to $76.29 per barrel. Though losses were present, they were more significant for WTI crude compared to Brent crude. The Globex contract for March saw a reduction of 79 cents to $81.64 per barrel, while April prices decreased by 82 cents to $81.14 per barrel.

Steeper Losses Seen in ULSD Contracts

ULSD contracts experienced the steepest losses of the day. The February contract saw a decline of 4.35 cents to $2.7519 per gallon, while March prices dropped by 4.3 cents to $2.7225 per gallon.

Lighter Losses in Gasoline Contracts

Although gasoline contracts also suffered losses, they were relatively lighter compared to other products. The front-month contract decreased by 2.57 cents to $2.2387 per gallon, and March prices moved 2.4 cents lower to $2.2670 per gallon.

Profit-Taking and Ongoing Tensions Impact Prices

The losses can be attributed, in part, to profit-taking as energy prices have experienced gains throughout the week. Ongoing tensions in the Red Sea and news of economic stimulus efforts in China have also influenced the market.

Weekly Outlook

Despite the losses on Friday, WTI prices were up by approximately 4.2% heading into lunchtime, while Brent crude saw a 3.9% increase. ULSD is expected to end the week 3.4% higher, and RBOB futures are projected to be 3.3% ahead of last week’s settlement.

Losses in the Futures Market Lead to Lower Diesel and Gasoline Prices

Diesel and gasoline prices in most spot markets across the nation have experienced a decline due to losses in the futures market. However, there have been slight gains of just under 1ct/gal in gasoline prices in Los Angeles and the Pacific Northwest. This increase can be attributed to the transition from high to low RVP (Reid Vapor Pressure) for Los Angeles CARBOB.

Renewable Identification Number Prices Continue to Plummet

The prices of Renewable Identification Numbers (RINs) are witnessing significant drops. D6 ethanol RINs have fallen 8cts to 58.5cts, while D4 biodiesel RINs have seen an 8.25cts decrease, reaching 59.5cts. These declines have continued for 11 consecutive days, with market participants describing the situation as “bottomless.” The weakening prices of soybean oil and stronger heating oil prices have influenced the blending economics of biofuels, thereby impacting RIN pricing.

Energy Contracts Experience Decline

Despite the Commerce Department’s release of data indicating a 0.2% increase in the core personal consumption expenditures price index in December (representing a 2.9% annual gain), energy contracts have been falling. This data suggests that efforts to lower inflation are proving effective and may lead to the Federal Reserve implementing rate cuts later this year.

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