Petroleum futures are sharply higher by midday Thursday, and technical charts suggest the next several hours of trading and the settlement could determine whether the 2024 trading range evolves into an uptrend.

On Thursday, expected cold weather in the U.S. and Middle East tensions could increase prices further. Meteorologists now expect wintry weather may gain a stranglehold on the eastern two-thirds of the U.S. continent next week. Severe weather could crimp some refineries and cold temperatures could push distillate molecules into winter burns.

In addition, the market also closely watched Iran's seizure of an oil tanker in the Gulf of Oman, which raises concerns about a wider sphere of conflict and warfare in the Middle East.

Those factors were enough to provoke a rally of about $2/bbl for crude, even though WTI and Brent have thus far failed to breach key levels of $75/bbl for WTI and $80/bbl for Brent. Also, brisk oil rallies in the morning have tended to fade ahead of settlement so far in 2024.

At midday Thursday, February WTI was ahead $2.04/bbl at $73.41/bbl. March Brent was up $1.94/bbl at $78.74/bbl.

Some brisk gains were also seen for gasoline and diesel. RBOB futures are benefitting from the advent of some January maintenance at some of the largest Gulf Coast refineries. Gasoline stocks are expected to climb but the increases may not match the 10-million-bbl and 8-million-bbl gains of the last two weeks.

February RBOB moved up 6.15cts/gal to $2.1288/gal. Cash markets were similarly higher with increases of 5.5-7cts/gal East of the Rockies and smaller gains of 4.5-6cts/gal out West.

Diesel should be the biggest beneficiary of cold weather. February ULSD futures were ahead 8.53cts/gal at $2.6859/gal. Right now, the market is anticipating some mid-January demand levels above 4 million b/d thanks to heating oil demand. Should there be any natural gas interruptions in northern states, the market could have more exponential gains.

The cold temperature has helped diminish the gap between areas with access to tidal water and inland bulk markets. Midwestern diesel had been available for 40-45cts/gal under futures but that discount has been pared to 28-29cts/gal.


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 Frank Tang, ftang@opisnet.com


(END) Dow Jones Newswires

01-11-24 1255ET