Crude oil and gasoline futures were recovering from steep morning declines near midday Wednesday, while distillate futures remained weak on forecasts of warmer weather next week across much of the U.S.

The West Texas Intermediate contract fell as low as $70.50/bbl in morning trading before buyers stepped in, pushing prices back toward $72/bbl. Brent crude futures have outperformed WTI over the past several sessions, widening the spread between the two benchmarks. The difference narrowed marginally in morning trading.

Refined products remained down ahead of midday, but RBOB futures, which were off by just over 4.5cts/gal earlier, recovered some ground to trade 1.25cts to 1.5cts lower. The NYMEX February RBOB was down by 0.38cts to $2.1087/gal at midday.

In U.S. spot markets, California CARBOB prices were up by 4.5cts to 5cts, while discounts along the Gulf Coast have widened, despite reports of flaring at some refineries. Discounts also widened a bit in the Chicago market as traders focused on weaker motor demand fuel demand caused by snow and frigid temperatures.

Diesel futures remained under pressure as above-normal temperatures are forecast next week for much of the U.S. The coming warm-up is also being reflected in natural gas futures that have come under pressure on Wednesday.

The NYMEX February ULSD contract was off about 4.5cts to $2.6148/gal just ahead of midday and was less than 1ct above the morning low. Most of the downside is diesel is in the front-month contract, narrowing the spread between the February and March contracts, which at midday was showing just over 4cts of backwardation.

Not only are intermonth spreads falling apart, but trade sources this morning said the "HOGO read" (heating oil minus gas oil) has slipped to inside of 15cts.

Spot distillate markets were largely following futures, down 4cts to 5cts.

While crude oil has rebounded from lows seen earlier Wednesday, the NYMEX February WTI contract was still off about 70cts to $71.70/bbl near midday.

March Brent was down $1.12 to $77.17/bbl. Although Brent is down more than WTI, its morning trading range has been fairly narrow.

More activity was shifting to the March contract with February WTI options set to expire on Wednesday. The March WTI contract was down 82cts to $71.70/bbl, erasing the light contango in WTI futures.


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 Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

01-17-24 1309ET