Crude oil and refined product futures began to bounce back on Wednesday, following significant declines the day before, as the U.S. released positive inventory and demand data.
Recovery in Futures
At 11:45 a.m. ET, crude futures were up by approximately 1.4%, while RBOB (Reformulated Blendstock for Oxygenate Blending) futures saw a gain of 2%. ULSD (Ultra-Low Sulfur Diesel) contracts climbed around 1.5%.
Despite the revival, contracts still have ground to cover after experiencing losses of more than 3% on Tuesday.
Gasoline Futures Leading the Way
Gasoline futures were the frontrunners in Wednesday’s rebound. The NYMEX (New York Mercantile Exchange) January RBOB contract rose by 3.97 cents to $2.0194 per gallon, and the February contract increased by 3.99 cents to $2.0331/gal.
Meanwhile, the NYMEX January ULSD contract climbed by 4.02 cents to $2.5476/gal, with the February contract not far behind, rising by 3.98 cents to $2.5201/gal.
Crude Oil Prices
The NYMEX January West Texas Intermediate (WTI) contract saw a rise of $1.05 to $69.66 per barrel, while the February WTI contract increased by 95 cents to $69.80/bbl. For the European benchmark Brent crude, the February contract saw a climb of $1.03 to $74.27/bbl, and the March contract rose by $1.01 to $74.53/bbl.
Influence on Spot Prices
Spot gasoline and diesel prices in the United States largely followed the futures market’s recovery. Gasoline prices in the Gulf Coast, Group 3, and Chicago markets experienced gains almost twice as high as those on the NYMEX screen. This follows the Energy Information Administration’s mid-morning report, which revealed a decrease in stocks last week in the Midwest and Gulf Coast regions.
Positive EIA Data
Although energy contracts have pulled back from their overnight highs, the release of EIA data has contributed to their upward trend. According to the agency’s report, U.S. crude inventories dropped by 4.3 million barrels in the week ending Friday. Additionally, gasoline stocks increased by a modest 400,000 barrels, while distillate supplies saw a relatively small growth of 1.5 million barrels.
Overall, futures are gradually regaining ground after the U.S. inventory and demand data painted an optimistic picture for the crude oil and refined product markets.
Refinery Utilization and Gasoline Demand
Implied U.S. gasoline demand saw a significant rise last week, reaching 8.85 million barrels per day (b/d). This represents an increase of almost 400,000 b/d compared to the previous week.
OPEC’s Global Oil Demand Forecast
OPEC reaffirmed its forecast that global oil demand will see a steady increase, projecting a growth of 2.25 million b/d by 2024. The producer group also predicted that the global economy would expand by 2.9% in 2023 and by 2.6% in 2024.
Addressing concerns regarding recent oil price declines, OPEC stated that the drop was primarily driven by exaggerated worries about oil demand growth, which negatively affected market sentiment. The report also attributed the decline to speculators reducing bullish positions while increasing short positions.
OPEC’s Outlook for 2024
Looking ahead to 2024, the OPEC Secretariat expressed cautious optimism about the fundamental factors influencing oil market dynamics. In order to stabilize prices, the cartel has agreed to reduce output by 2.2 million b/d starting next year.