Strong margins on distillate production have been paying the bills for U.S. refiners, but NYMEX ULSD futures this week have slipped to their lowest level since early July, narrowing the crack to close to $18/bbl.
ULSD futures were off Thursday by 2-2.75cts/gal with the June contract down 2.83cts to $2.4236/gal. Diesel at the Gulf Coast has slipped to less than $100/bbl and prices in the seven bulk markets that OPIS tracks are down anywhere from 2.75-4cts on the day.
The weakness is surprising against the backdrop of plenty of Russian refinery output down in the wake of drone attacks, but May can include very shaky weeks for distillate across the globe.
Crude saw an overnight rally which faded quickly on renewed selling. July Brent was trading at $83.17/bbl, a loss of 27cts on the day. June West Texas Intermediate was off 51cts at $78.49/bbl, and the recent declines aren't perceived as steep enough to curtail drilling. A particular advantage in the market is a very low skew of speculative length. Unlike previous second-quarter selloffs, there aren't a lot of trapped longs in the market.
The same can be said of the RBOB contract, which managed to stay close to even on the day. June RBOB contracts were up 0.17cts at $2.5791/gal at midday with cash prices up by 0.35ct-1.6cts east of the Rockies, but down by a cent or two in Western venues.
It now appears that RBOB reached its likely first-half 2024 peak on April 12, matching the same peaking date as in 2023.
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 Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
05-02-24 1311ET
