Crude Contracts Weaken on Lack of Fundamental News and Expectations of Inventory Builds

Strategic Insights -

Crude contracts on the New York Mercantile Exchange (Nymex) were weak on Tuesday due to the lack of fundamental news and the anticipation of crude stock builds in inventory reports. This was on top of many traders rolling their positions out of the April contract before its expiration. The April contract for light, sweet crude settled down 13 cents at $18.43/bbl on its last day as the near-month contract, while the May contract settled down 6 cents at $18.41.

Key Takeaways:

  • Crude contracts on Nymex weakened on Tuesday due to lack of fundamental news and anticipation of crude stock builds in inventory reports.
  • The April contract for light, sweet crude settled down 13 cents at $18.43/bbl, while the May contract settled down 6 cents at $18.41.
  • Many traders rolled their positions out of the April contract before its expiration.
  • The Kuwaiti oil workers' strike at 2 million b/d Kuwait Oil Co. had a limited impact on crude prices due to replacement workers maintaining output volumes.
  • Crude on the spot market also stayed soft on bearish expectations for the inventory reports.
  • Traders pointed to the National Petroleum Refiners Association convention in San Francisco as contributing to thin trading volumes.
  • Gasoline contracts on Nymex failed to break through resistance levels despite expectations of draws on gasoline stocks in inventory reports.
  • A Dallas-based trader expressed hope that products contracts would strengthen after poor crack spreads lately, citing gasoline as a strong technical instrument in the long term.
  • The April heating oil contract on Nymex settled down 0.17 cents at 45.65 cents/gallon, with a bearish trend expected to continue.

Statistics:

  • The April contract for light, sweet crude settled down 13 cents at $18.43/bbl.
  • The May contract settled down 6 cents at $18.41.
  • The April gasoline contract settled at 56.15 cents/gallon.
  • The April heating oil contract settled down 0.17 cents at 45.65 cents/gallon.
  • The April natural gas contract fell 1 cents to settle at $1.513/MMBtu.

Sources:

  • New York Mercantile Exchange (Nymex)
  • A New York-based trader
  • A Dallas-based trader
  • A New York-based analyst
  • Kuwait Oil Co.