Energy futures contracts are currently witnessing significant declines, with both crude oil and ULSD contracts on track to extend a slide that began last week.
Morning Release of Petroleum Inventory and Demand Data
The day started with losses for these contracts, and the declines accelerated following the morning release of weekly petroleum inventory and demand data from the U.S. Energy Information Administration (EIA).
According to the EIA report, U.S. gasoline and distillate supplies have seen a substantial increase. This is a result of refinery activity picking up after the completion of seasonal maintenance at facilities across the country.
Impact on Spot Markets
The weakness in futures contracts has also influenced the prices of gasoline and diesel fuel in spot markets nationwide. In fact, gas prices at several spot markets east of the Rockies have dropped below the $2/gal mark.
Crude Contracts Go Below $70/bbl Mark
Due to the drop in prices, U.S. crude contracts have fallen below the $70/bbl mark. At around 11:45 a.m. ET, the January contract for U.S. benchmark West Texas Intermediate crude had sunk $2.78 to $69.58/bbl, coming close to earlier lows. Similarly, the February contract dropped below $70, with prices falling $2.67 to $69.86/bbl. As for European benchmark Brent crude, its February contract witnessed a $2.59 decline to $74.61/bbl, while March Brent was down $2.52 to $74.65/bbl. If these losses persist throughout the day, it will mark the fifth consecutive day of declines for crude.
Refined Products Also Impacted
Refined products are not exempt from the losses either, with prices dropping over 7cts/gal. The January RBOB contract sank by 7.85cts to $2.0318/gal, while February prices were off by 7.78cts to $2.0350/gal.
ULSD Contracts Head for Sixth Day of Declines
The January ULSD contract experienced a setback of 7.69cts, falling to $2.5642/gal. Similarly, February prices for ULSD contracts dropped by 7.72cts to $2.5276/gal. ULSD contracts are currently on track for a sixth day of declines.
Oil Price Update
Gasoline and diesel prices have experienced significant declines in various regions across the United States. Gasoline contracts in spot markets east of the Rockies, such as New York Harbor and Chicago, have seen drops ranging from approximately 8 cents per gallon to nearly 12 cents per gallon. In fact, gasoline prices in Chicago have now dropped below $1.75 per gallon. Meanwhile, West Coast markets have observed declines in the range of 5 to 8 cents per gallon.
In contrast, diesel prices have not displayed such pronounced regional variations. Declines have been more consistent, ranging from 6 cents per gallon in the Gulf Coast to 10 cents per gallon in Los Angeles.
According to the latest report from the Energy Information Administration (EIA), U.S. gasoline inventories rose by 5.4 million barrels in the week ended Friday, placing supplies approximately 1% below seasonal averages. Distillate inventories also experienced an increase of 1.3 million barrels. However, supplies in this category remain tight as the winter heating season approaches, currently standing at about 13% below the five-year average for this time of year.
On the other hand, crude oil inventories saw a decline of 4.6 million barrels. This decrease coincided with an increase in the U.S. refinery utilization rate, which rose by just under a percentage point to 90.5%. This rate is about two points higher than the current four-week average.
The EIA also reported increases in implied demand for both gasoline and distillate products. Gasoline products supplied during the week - an indicator of implied demand - amounted to 8.46 million barrels per day (b/d), representing an increase of approximately 200,000 b/d compared to the previous week. This figure is also approximately 100,000 b/d higher than the corresponding period last year. Implied distillate demand rose by a solid 740,000 b/d to 3.75 million b/d, about 200,000 b/d higher than last year.
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