- Wednesday, October 16, 2024
Crude futures experienced a significant drop of around $2/bbl, while refined products also slid during midday trading on Tuesday. This decline can be attributed to a stronger dollar and renewed global economic concerns that affected the petroleum complex.
The dollar index climbed approximately 0.8% following the release of U.S. data indicating higher business output and manufacturing activity in October. As a result, crude futures priced in dollars became more expensive for investors holding non-U.S. currencies.
Furthermore, investors responded by selling in the energy market as weaker economic data emerged from Europe, particularly from Germany and the U.K.
At 12:00 p.m., NYMEX December-delivered West Texas Intermediate crude futures fell $2.30 to $83.30/bbl, while January WTI dropped $2 to $82.40/bbl. The U.S. benchmark contracts are currently facing a third consecutive day of losses after Monday's decline of $2.50.
London-based December ICE Brent futures experienced a decline of $2.20 to $87.65/bbl, with January Brent falling $2.05 to $86.65/bbl.
In line with crude futures, refined product futures also recorded significant declines. The most-active December NYMEX RBOB dropped by 7.20cts to $2.2395/gal, while the front-month November RBOB fell 7.80cts to $2.2505/gal.
Additionally, December ULSD declined by 8.25cts to $2.9330/gal, and November ULSD fell 8.75cts to $3.0080/gal.
A report released by the International Energy Agency on Tuesday predicts that global demand for fossil fuels will likely peak before the end of the decade. Geopolitical uncertainty has led to mounting shocks in the global energy system, which in turn accelerates the transition to renewable energy sources.
In the spot market, premiums in Group 3 (X grade) ULSD continued to decline during midday trading, with a weakening of almost 50cts to just 7.5cts above November futures. This decrease can be attributed to resupplies alleviating short-term physical tightness related to demand for agricultural equipment during the Midwest harvest season.
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