Oil Markets Show Resilience Amid Winter Weather

Strategic Insights -

Despite harsh winter weather and favorable reports on demand, inventories, and refinery runs, the oil markets showed little enthusiasm, with prices making slight gains late in the session. One trader noted that the winter weather was preventing prices from plummeting further. The American Petroleum Institute (API) reported a 3.9 million barrel drawdown of distillate fuel stocks, while the Energy Information Administration (EIA) said demand for distillates rose 12.9% in the latest four weeks.

Key Takeaways:

  • No. 2 heating oil futures for April delivery inched up 0.19 cents to $45.74 per gallon on the New York Mercantile Exchange, following a decline for most of the trading session.
  • The API reported a 3.9 million barrel drawdown of distillate fuel stocks, with demand for distillates rising 12.9% in the latest four weeks to 3.873 million barrels per day.
  • The EIA said jet kerosene demand rose 10.4%, or 141,000 barrels per day, to 1.491 million barrels per day, driven by increased blending into low-sulfur diesel to prevent gelling.
  • EIA recorded a 7.6% gain in residual fuel oil demand, with the fuel being used by power plants to meet surging cold-weather electricity demand.
  • April West Texas Intermediate crude oil futures increased 9 cents to $14.74 per barrel, following a decline earlier in the day, with traders expecting the Organization of Petroleum Exporting Countries (OPEC) to roll over the current production ceiling at their meeting on March 25.
  • Atlantic Richfield Co. announced that its Line 1, damaged by the Los Angeles earthquake, would not return to service until May 1, with shipments of California crudes on Line 63 being prorated to 55% of nominations.

Statistics:

  • No. 2 heating oil futures for April delivery increased by 0.19 cents to $45.74 per gallon.
  • Demand for distillates rose 12.9% to 3.873 million barrels per day in the latest four weeks.
  • Jet kerosene demand rose 10.4% to 1.491 million barrels per day.
  • Residual fuel oil demand rose 7.6% to unknown levels.
  • April West Texas Intermediate crude oil futures increased by 9 cents to $14.74 per barrel.

Sources:

  • American Petroleum Institute
  • Energy Information Administration
  • New York Mercantile Exchange