Petroleum futures are falling under selling pressure by midday Tuesday, as WTI has drifted to below $70/bbl and refined product declines are running around the 4cts area heading into afternoon.
Volumes are slimming down in the front-month contracts as January WTI expires on Friday and more volume is shifting toward the February contract. However, with the holidays approaching, volumes in general are slimming down.
China and its struggling economy is the typical "down day" response, trade sources said, and some disappointing data is putting pressure on markets. The market is also expecting the Federal Reserve to drop interest rates by 25 basis points, but with tariffs on the table comments from Chairman Jerome Brown regarding the future of monetary policy may have more weight than interest rate moves.
January and February futures are down by more than $1 heading into midday, but are getting a bit of a bounce off the lows seen earlier this morning. After trading as low as $69.18/bbl, January WTI is trading at $69.57/bbl down $1.14, with the February contact off $1.10 at $69.19/bbl. February Brent is down by a little over $1, as well Tuesday morning at $72.84/bbl at last glance.
Refined product futures are down as well with the diesel contract under the most pressure so far Tuesday.
Over the past decade, the low print of the sprint to winter decline was Dec. 13, according to technical analyst Walter Zimmerman in an analysis of RBOB seasonality. That date has passed and Zimmerman has concluded that the seasonal cycle low is still "MIA." In the report, however, he did note that the low has happened in January four times since 1985, the most recent coming on Jan. 18, 2007. The real outlier was 2020 when the seasonal low was March 26, which coincides with the Covid-19 lockdowns.
Zimmerman also notes that the January 2025 contract traded as low as $1.7994/gal and, while that may coincide with the average, spring to winter decline percentage target, but it is a bit early in the cycle for a seasonal low.
January and February futures are down in the 3.5cts area heading into midday as January RBOB last printed at $1.9416/gal with February at $1.9508/gal. Most spot markets are following suit, though stronger differentials for gasoline in the Group and Pacific Northwest are bucking that trend.
ULSD declines are greater than 4cts as there has not been much in the way of cold weather to stoke demand and in Europe natural gas and electricity markets have cooled off a bit. The January ULSD contract is off by 4.4cts at $2.22/gal while the February ULSD contract is down slightly less than a 4.25cts loss to last trade at $2.2241/gal.
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 Andrew Atwal, aatwal@opisnet.com
(END) Dow Jones Newswires
December 17, 2024 12:26 ET (17:26 GMT)
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