Crude oil and refined product futures experienced a significant drop at midday on Tuesday, with U.S. oil prices declining by nearly 3.6% to under $69 per barrel.
The decrease in futures prices is due to concerns about oversupply amidst lackluster demand. According to Bloomberg, Russian crude oil shipments have reached levels not seen in five months. In addition, U.S. oil production remains strong, with the U.S. Energy Information Administration reporting average output of about 13.2 million barrels per day for November.
As of 11:45 a.m. ET, crude contracts were down by more than $2.50 per barrel, with the NYMEX January contract for West Texas Intermediate (WTI) down $2.57 at $68.75 per barrel – just cents above the morning session’s lows. The February WTI contract also dropped by a similar amount to $68.99 per barrel.
Similarly, Brent crude for February delivery saw a decline of $2.73 to $73.30 per barrel, while the March contract dropped $2.64 to $73.61 per barrel.
The most significant losses were observed in diesel futures, with the NYMEX January ULSD contract down 10.17 cents at $2.507 per gallon and the February contract down 10.17 cents at $2.4772 per gallon.
Meanwhile, gasoline futures fell below $2 per gallon, as the NYMEX January RBOB contract decreased by 5.88 cents to $1.9843 per gallon, and the February RBOB contract was 5.42 cents lower at $1.9982 per gallon.
The weakening NYMEX had a downward impact on U.S. spot gasoline and diesel prices, causing multi-month lows for gasoline blendstock in cash markets across the country. Chicago spot gasoline prices hovered just above $1.60 per gallon near midday, representing a decrease of more than 40 cents compared to prices in western markets.
Supply and demand concerns will continue to dominate the market, with the American Petroleum Institute scheduled to release its weekly inventory data later in the day. Additionally, the Energy Information Administration will publish its own weekly supply and demand data on Wednesday morning.
