Energy Futures Contracts See Across-the-Board Gains
Energy futures contracts are seeing widespread gains, with NYMEX ULSD contracts leading the upward trend. RBOB futures and crude contracts also show gains, while low refinery utilization rates contribute to declining fuel prices.
Troy D. Hanson
February 07, 2024
Energy futures contracts are experiencing widespread gains, as bullish federal inventory data is supporting the prices of refined products.
NYMEX ULSD Contracts Take the Lead
Leading the upward trend on Wednesday are NYMEX ULSD contracts. The March contract has risen by 4.72 cents to $2.7899 per gallon, coming in just 1 cent below earlier highs. Similar increases can be seen in April prices, which have risen by 4.05 cents to $2.7199 per gallon.
RBOB Futures Follow Closely
Not far behind are gains for RBOB futures. The front-month contract for RBOB futures is up by 3.67 cents, reaching $2.2540 per gallon. Moving into April, prices have increased by 3.3 cents to $2.4783 per gallon.
Crude Contracts Show More Moderate Gains
In contrast, the gains for crude contracts are more restrained. The March contract for West Texas Intermediate crude has climbed 26 cents to $73.57 per barrel, which is about 40 cents below earlier highs. Similarly, April prices have risen by 25 cents to $73.62 per barrel. Meanwhile, the April contract for European benchmark Brent crude is up by 28 cents, reaching $78.87 per barrel, while the May contract advanced 30 cents to $78.57 per barrel.
Refinery Product Contracts Boosted by Inventory Data
The increases seen in refined product contracts coincide with the Energy Information Administration's report on Wednesday, which revealed a 3.2 million barrel decline in U.S. diesel inventories over the past week. Currently, these inventories are approximately 7% below seasonal averages. Gasoline inventories also declined, dropping by 3.1 million barrels and placing them 1% below the five-year average.
Fuel Prices Decline as Refinery Utilization Remains Low
The recent decline in fuel prices can be attributed to low refinery utilization rates in the United States. According to the Energy Information Administration (EIA), refinery operations are currently slowed down due to ongoing seasonal maintenance and refinery outages across the nation. This has led to an increase in U.S. crude inventories, growing by 5.5 million barrels.
Interestingly, despite the decreased refinery output, there has been a strong demand for gasoline. The EIA reported that gasoline products supplied during the last week reached 8.8 million barrels per day (b/d), showing an increase of about 660,000 b/d compared to the previous week and nearly 400,000 b/d higher than the same period last year.
Meanwhile, gasoline and diesel prices in spot markets across the country have generally mirrored the movements on the NYMEX screen. However, gasoline prices in the Pacific Northwest have experienced gains almost double those seen in futures contracts. Group 3 diesel prices have also seen significant increases, rising by over 12 cents per gallon, which has reduced discounts by about 7.5 cents.