After a sharp drop in prices on Monday, futures are making a comeback Tuesday, with crude oil recovering about two-thirds of the losses seen on Monday.
For refined products, weather appears to be playing a role in some of the upward momentum seen Tuesday as cold temperatures are supporting diesel and some extremely cold weather could impact refinery operations, most notably in the Great Lakes region.
Even though crude oil is up some $2, the product contracts are outpacing the moves in West Texas Intermediate and Brent, helping boost the crack spreads.
With cold weather, ULSD futures are rallying and most of the gains are in the February contract as the spread between February and March has widened into the 4.5-5cts area. Currently, front-month ULSD is trading at $2.6417/gal, up about 6.5cts and not far off of the daily high. Natural gas is also finding some buying support as the contract is angling toward a fifth day of gains with the February contract trading up 19cts to $3.17/MMBtu and some 50cts higher than the March contract.
The RBOB contract has also moved higher, with the February contract trading up 6.3cts at $2.0914/gal, a strong rebound from a market that was testing the $2 level at Monday's lows. Like the rest of the market, most of the gains are concentrated in the front end of the curve.
Spot markets east of the Rockies are largely following the paper markets higher, but in the case of San Francisco CAROB, the market is bucking the overall trend with the market shifting to a discount versus futures and offsetting most of the move in futures.
Crude oil has bounced back as well, with the front-month WTI contract up $1.98 at $72.74/bbl as the contract is only about 20cts below the earlier highs.
Brent for March is also having a strong day, with the contract up roughly $2 at $78.09/bbl.
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
01-09-24 1242ET
