Market Report & Analysis for 3/29/2019 Morning Edition
Morning Market Overview
Crude and refined product prices settled the midweek session lower following weekly federal data showing an unexpected build in U.S. commercial crude inventory, while the April RBOB contract plunged on slowing gasoline demand against year ago.
NYMEX April RBOB futures lost 6.02cts with a $1.8955 gallon settlement, with the sharp retreat in the gasoline contract following nine consecutive sessions with a gain that lifted the spot-month futures contract to a $1.9807 better-than five-month high.
The selloff comes ahead of the April contract’s expiration at Friday’s close and after April delivery moved to a 5cts premium against May delivery on Tuesday, the widest front-to-second month spread since the end of the 2018 gasoline season on the final day of August.
April RBOB futures reversed ahead of the $2 gallon benchmark, as implied demand reported by the Energy Information Administration shows a slowdown against year ago as retail prices climb. The April contract sharply narrowed its premium position against May in the backwardated market to 2.22cts gallon, with traders appearing unwilling to challenge the psychological benchmark.
EIA reported implied gasoline demand dropped 285,000 bpd on the week to 9.124 million bpd, while demand over the four weeks ended March 22 at 9.184 million bpd trailed the comparable year-ago pace by 179,000 bpd or 1.9%. EIA reported gasoline stocks declined a more-than-expected 2.9 million bbl to a 238.6 million bbl 13-week low during the week ended March 22, and are down 1 million bbl against year ago. However, the draw was less than a 3.47 million bbl decline reported late Tuesday by the American Petroleum Institute.
The same was true for distillate fuels, with a more-than-estimated 2.1 million bbl decline reported midmorning by the EIA dwarfed by Tuesday’s reported 4.28 million bbl draw by API. NYMEX April ULSD futures settled down 0.93cts at $1.9806 gallon, maintaining a modest discount to the May contract ahead of expiration Friday afternoon. NYMEX May West Texas Intermediate futures settled down $0.53 at $59.41 bbl, while the ICE May Brent contract ended the session with a modest $0.14 decline at $67.83 bbl. May Brent expires Friday afternoon, with the June contract settling at a $0.59 discount to May in the backwardated market.
