In the Pipeline: Insights on Gas Oil and Gasoline Prices Amidst Shifting Demand and Supply.

 Russia oil refineries ablaze following bombing by Ukraine.  Photo credits: The Moscow time In a surprising turn of events, OPEC+ announced on March 2nd, 2024, that the voluntary output cuts of 2.2 million barrels per day would extend into the next quarter. This decision, contrary to market expectations, sent shock-waves through commodity markets. Initially, the market reacted unexpectedly, with April futures for RBOB gasoline and NY Harbor ULSD plummeting by 3.6% and 3.8%, respectively, in the week following the announcement. Speculators, it seemed, had their sights set elsewhere, reacting more strongly to reports of China's crude oil import contraction, which saw a significant drop of 5.7% in the first two months of the year. However, the tide swiftly turned as April futures prices for RBOB Gasoline and NY Harbor ULSD surged by 6.9% and 6.2% respectively week-on-week in the week ending March 15th, 2024. This dramatic reversal was fueled by US inflation data for February, rev...

      The global oil market continues to experience dynamic shifts in supply and demand, mainly influenced by production agreements, inventory levels and trade policies. According to CME data, April's future contracts for RBOB Gasoline and NY Harbour ULSD  closed at $2.6109 per gallon and $2.6993 per gallon respectively.This represents a 4.2% and 2.1% increase respectively, week on week. The monthly volatility of April futures contracts for gasoline and gasoil stood at 14.7% and 5.5% respectively. This volatility is mainly pegged on speculator’s reaction to oil inventory levels, higher-for-longer interest rates, disruption of petroleum supply chains and speculations regarding voluntary production cuts by OPEC+.       Uncertainty surrounding ceasefire talks between Israel and Hamas, as well as ongoing Houthi attacks on Red Sea shipping also added a risk premium to oil prices, and disruptions on US refineries as well as Russia's export ban on gasoline. T...