Crude oil and refined product futures contracts are experiencing a slight increase on Friday morning, offering a glimmer of hope after a week of declines.
Oil prices are trading within a constrained range this morning. The January contract for U.S. benchmark West Texas Intermediate (WTI) crude has risen by $1.55 to $70.89 per barrel at 11:45 a.m. ET, coming in around 80 cents below the day’s peak. Meanwhile, the February contract is up $1.53 to $71.12 per barrel. Over in Europe, the February and March contracts for Brent crude, the European benchmark, are also seeing similar increases, edging up by $1.54 to $75.59 per barrel and $75.78 per barrel, respectively.
Gasoline contracts are leading the way for refined products, with the January RBOB contract climbing by 4.76 cents to $2.0488 per gallon. February prices are also on the rise, advancing by 4.72 cents to $2.0557 per gallon. As for ultra-low-sulfur diesel (ULSD) contracts, the January contract has jumped by 3.52 cents to $2.5844 per gallon, while the February diesel contract is up by 3.59 cents to $2.5540 per gallon.
Although oil prices are set to conclude the week approximately $3 per barrel lower, RBOB futures are facing a week-to-week decline of about 7 cents per gallon. ULSD contracts are also on track for losses of just under 8 cents per gallon as the week draws to a close.
Oil Prices Under Pressure Amid Rising Production and Weak Demand
Prices in the oil market have experienced downward pressure due to a combination of increased production and lackluster energy demand. Refineries have been ramping up their output after the conclusion of seasonal maintenance, further contributing to the surplus in supply.
According to the Energy Information Administration’s latest report, U.S. gasoline inventories recorded a significant increase of 5.4 million bbl for the week ending December 1. Distillate stockpiles also saw a rise of 1.3 million bbl. Moreover, U.S. oil production has averaged at 13.1 million b/d, representing a significant increase of 900,000 b/d compared to last year.
In an attempt to stabilize oil prices, Saudi Arabia and Russia have called upon all members of the OPEC+ group to adhere to the cartel’s agreement from last month. This agreement aims to reduce output by 2.2 million b/d.
Despite these efforts, markets have largely disregarded the OPEC+ agreement due to internal disagreements within the group and a sluggish global energy demand.
* Reporting by Steve Cronin; Editing by Michael Kelly