NYMEX March crude futures settled 17 cents lower at $100.74/barrel Tuesday, while RBOB futures pared gains seen a day earlier as concerns over high gasoline supply and weak demand in the US weighed on the commodity.
March RBOB settled 3 cents lower at $2.9825/gal, a day after rallying on refinery outage news.
"We are seeing a lot of pressure on the gasoline market, but its actually a bit misconstrued, most of the supply is becoming landlocked with the high costs of transport out of profitable areas, like [the Midwest], to keep it off balance across the country," said Carl Larry, president of Oil Outlooks. "Bottom line, we're going to see high gasoline stocks overall and still see higher prices at the pump."
Weekly oil data from the American Petroleum Institute and US Energy Information Administration, to be released late Tuesday and early Wednesday, respectively, are expected to show a 600,000-barrel increase in gasoline stocks for the week ending February 10, according to analysts polled by Platts.
The five-year average of the EIA data shows gasoline stocks rising 500,000 barrels the second week of February before trending lower into spring.
NYMEX March heating oil settled 48 points higher at $3.1648/gal, while ICE March gasoil weakened, settling at $992.25/mt, down $4.25.
"European gasoil has trended sideways despite the wave of cold weather on the continent, we are looking at a build-up of independent storage of product in the ARA and end-consumer drawing down stocks preventing a further rise in flat prices in the short-term," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.
ICE March Brent settled at $118.16/b, down 23 cents, on the contract's day of expiration.
The ICE Brent March/April spread settled at 81 cents/b, having risen 27 cents/b from the previous day's close. The April/May spread settled at 64 cents/gal, up 15 cents.
The spread rose as the underlying North Sea crude oil market continued its upward trend as fundamentals and geopolitical factors provided support.
Tchilinguirian said the recent rise in crude was supported by bullishness over Greece but also physical supply outages, notably the halt of exports from South Sudan of around 250,000 b/d, shortfalls in production in the North Sea and delays to Urals loading in the Black Sea.
The perception of an impending deal over Greece austerity measures upstaged Moody's downgrading Monday of th debt ratings of Italy, Spain and Portugal and its placement of negative outlooks on France, the UK and Austria, said Mike Fitzpatrick of Kilduff Group in a note.
That permitted the continuation of an upward move in NYMEX front-month crude off the February 2 low of $95.44/b.
"With the Bank of Japan adopting stimulative monetary policy, a mind-set seems to be forming that policymakers will continue to print money until a sustainable recovery catches," Fitzpatrick said. "Unfortunately though, the language of Moody's downgrade statement, warning of 'incredibly weak macroeconomic prospects,' appears closer to the immediate truth."
