Oil and diesel futures were lower Tuesday while RBOB was slightly higher after back-to-back sessions of spirited headline-inspired buying.
Based on the most recent data from CME, total volumes in West Texas Intermediate have topped 2 million contracts in back-to-back days. Trading volume of that magnitude has not happened since the beginning of April 2020.
Open interest also took a break Monday, falling sharply after eclipsing the 2 million contract mark. Volume is not likely to top that level Tuesday as activity appears to be cooling off.
Tuesday can also be described as an "inside day" where the high and low are within Monday's range for WTI and Brent. A bit of a breather seems to be in order after the oil market has been on quite a run of late. Since the first trading day of 2025, WTI futures have added $7.10, with Brent adding $6.37.
Over the past few days, WTI and Brent have not matched each other's moves, with WTI extending or decreasing more. On Tuesday, the declines in WTI are a bit more than Brent as February WTI was last trading down about $1.25 at $77.58/bbl. The heaviest losses are in the front month, taking out some of the backwardation that is still greater than $1, with February expiration just over one week away.
The March Brent contract continues to maintain a price over $80, though the contract did briefly dip below that level, trading as low as $79.87. Heading into midday, front-month Brent was trading at $80.09/bbl, down 92cts.
Front-month diesel futures are also under some pressure, with February and March futures off by about 2cts. Like crude, ULSD has had quite a run since the beginning of the year, but the rally really got started just after Christmas.
Since Jan. 2, though, the contract has added roughly 21.25cts. Currently, February ULSD is off by 2.02cts at $2.5131/gal.
RBOB futures are moving the other way, with February up slightly and the rest of the forward curve pointing a bit lower, narrowing some of the short-term carry. Additionally, based on Monday's settlements, the paper crack spread dropped below $10/bbl for the first time in over a year. Some buying Tuesday has helped support the paper crack spread as the February contract is up about a half cent at $2.1043/gal, pushing the crack spread back toward $11/bbl thanks largely to the drop in crude oil.
Cash markets are mostly higher with the paper gains, but CARBOB stands out as a jump in premiums, thanks to refinery flaring, has prices up by double digits just before 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 Denton Cinquegrana, dcinquegrana@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
01-14-25 1253ET