Crude oil and refined product futures were rallying on Wednesday with oil up just over $2 and products posting increases of more than 5cts.

The price action is similar to Tuesday, though the market so far has been able to hold the upside Wednesday, whereas on Tuesday futures ultimately closed lower. Tensions in the Middle East are ramping up and protests have forced the shutdown of Libya's 300,000 b/d Sharara oil field, among Libya's largest fields.

Tensions are ramping up after a senior Hamas leader was killed on Tuesday, and this morning, blasts killed more than 100 at a memorial for Iranian Major General Qassem Soleimani as these events put the region further on edge.

The news helped bring buyers into the oil markets as February West Texas Intermediate reached $72.90 this morning, coming up shy of Tuesday's $73.64 high while Brent topped out at $78.41 earlier Wednesday. At midday front-month WTI was trading at $72.42/bbl, up $2.03 with March Brent at $77.83/bbl, up $1.94.

Refined product futures were also rallying with RBOB and ULSD now outpacing the increase in crude oil.

RBOB futures were up by 5.71cts at $2.152/gal and were about 1.25cts below the earlier highs. Like WTI, RBOB was coming up short of the highs seen on Tuesday.

Most cash markets were following the futures contract higher, but there were a few markets not quite keeping pace as Group 3 discounts widened a few cents, keeping upside on prices at bay. The San Francisco market, on the other hand, was seeing prices dip about 2.5cts as premiums have narrowed.

The diesel market was getting a boost of about 7.5cts Wednesday as some winter weather is anticipated over the weekend in the Northeast. The forecast for most of the major cities is still up in the air, but Washington, D.C., to Boston has seen very little measurable snow over the past two years.

Front-month diesel futures jumped by about 7.25cts by midday, last trading at $2.5984/gal, but at one point the February ULSD contract was up by nearly 10cts. Group 3 diesel was also seeing discounts widen slightly as inventories, according to market sources, are at the highest for this time of year since 2018 in the Group.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Denton Cinquegrana, dcinquegrana@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

January 03, 2024 12:59 ET (17:59 GMT)