The strong rebound in futures buying seen on Monday hit a roadblock on Tuesday as prices encountered resistance. The NYMEX March West Texas Intermediate contract made a run towards $74 per barrel while Brent approached $79 per barrel. Although prices remained close to the morning highs, buyers became more cautious around midday.
Support for oil markets came from multiple sources. Houthi rebels claimed additional attacks in the Red Sea, intensifying geopolitical concerns. Additionally, the dollar, having strengthened over the past few days, weakened slightly, providing further support to oil prices.
During morning trade, the March WTI contract rallied to $73.74 per barrel and was up 85 cents, reaching $73.63 per barrel as of 11:45 a.m. ET. This places the price about $2 above Monday’s low. Similarly, April Brent was trading 91 cents higher at $78.90 per barrel, just a few cents below the morning highs.
After some profit-taking following Monday’s gains, refined product prices appeared to take a breather. However, NYMEX ULSD futures began to pick up momentum, with the March and April contracts rising more than 3 cents. The strength in diesel prices could be attributed to the recent drone attacks on Russian refineries by Ukrainian forces. This is also reflected in ICE gasoil futures, which recently traded at $824 per metric ton for the March contract or the equivalent of $2.6325 per gallon.
ULSD Futures
ULSD futures are currently trading at around $2.76 per gallon, with the front-month contract increasing by approximately 3.5 cents to $2.7604 per gallon – just slightly below the earlier morning high.
Low-RVP Gasoline Contracts
While the NYMEX March RBOB contract has experienced a modest increase, the majority of gains can be attributed to the outer-month contracts for low-RVP gasoline. As a result, the spread between March and April has widened to nearly 23 cents.
NYMEX March RBOB Contract
The NYMEX March RBOB contract has risen just over 0.5 cent to $2.2149 per gallon, which is still more than 1 cent below the morning high. However, the April contract has seen a more significant increase of over 1.5 cents, reaching $2.446 per gallon.
Strength in Gasoline Markets
The strength observed in the gasoline markets is also prevalent in U.S. spot markets. The discount of Chicago spot CBOB to futures has decreased by 5 cents on Tuesday and is now at 12 cents under the March RBOB contract. It is worth noting that prices in this specific market have shown signs of improvement throughout recent trading sessions.