Oil futures diverged during afternoon US trading Tuesday as the NYMEX crude and RBOB contracts pushed above Monday’s settles even as ICE Brent and NYMEX heating oil remained under pressure from mixed macroeconomic data.
NYMEX May crude closed US trading up a marginal 1 cent at $88.72/b after pushing as high as $88.94/b in the afternoon session. The front-month contract had earlier fallen to a fresh four-month low of $86.06/b overnight.
NYMEX May RBOB also pushed higher in afternoon trade, settling up 2.42 cents at $2.7818/gal.
“Some of the selling pressure seems to have eased a bit today, and we’ve seen some short covering,” Tradition Energy analyst Gene McGillian said. “It seems to be predicated on the idea that we’re going to see another drawdown in gasoline stocks” and that the selloff in RBOB was overextended.
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By contrast, ICE June Brent closed 72 cents lower at $99.91/b, while NYMEX May heating oil settled down 2.27 cents at $2.8065/gal.
Oil markets fell to fresh lows on mixed economic data during overnight trade, analysts said — the June Brent contract bottomed out at $98/b — before rebounding in the US session. Analysts said that the moderate bounce in US trading failed to keep pace with a stronger rebound in both equities or other commodities such as metals, which pared losses following the sharp selloffs seen Monday.
“It’s still an overall weak performance [in oil] on a day when the S&P is up … metals are rebounding and a lot of things are showing more of a snap back to the upside than the oil market is,” said Tim Evans, energy analyst at Citi Futures Perspective.
At the 2:30 p.m. EDT (1830 GMT) NYMEX market settle Tuesday, the Standard & Poor’s 500 index was up 1.10% at 1,569.50, while the Dow Jones industrial average was 0.79% higher at 14,715.2. The S&P had shed 2.3% over the course of US trade Monday, while the DJI dropped 1.79%.
“The message that the market is sending is to pay more direct attention to oil fundamentals and less to external distractions,” Evans said, adding that the trade correlation between moves in the S&P 500 and oil futures has broken down. “Petroleum isn’t tracking with the S&P and it hasn’t tracked with US GDP…. Equities strength should point to an expanding economy and an increase in demand for oil, but it ignores the supply-side of the equation.”
Analysts said that the continuing pressure from high US domestic crude inventories has added to the weight on oil prices.
The American Petroleum Institute is scheduled to release fresh inventory data on US fuel stocks at 4:30 p.m. EDT (2030 GMT) Tuesday, with the Department of Energy numbers due on Wednesday morning.
Analysts polled by Platts on Monday anticipate a 1.25 million barrel build in US crude stocks, a 1.1 million barrel decline in US gasoline inventories, and a modest, 850,000 barrel slide in distillate stocks.
Mixed macroeconomic indicators were adding to the downward pressure on the Brent complex, analysts said, pointing to a lower-than-expected reading from the influential ZEW Indicator of Economic Sentiment survey, which acts as a key macroeconomic indication in Germany and Europe.
The report showed a decline of 12.2 points in April to 36.3 points in German sentiment. The drop exceeded market expectations, particularly in light of the strong 48.5 level seen in March.
“Brent is under greater pressure because of the economic crisis [in Europe],” McGillian said.
Additionally, US CPI fell back 0.2% month-on-month in March, according to a release by the US Bureau of Labor Statistics, largely due sharp drops in the cost of gasoline. The drop was somewhat unexpected after the 0.7% jump in February.
Source: platts.com
