NYMEX petroleum contracts were sharply lower Monday and the aggressive selling may have more room to run as contracts were at or near fresh intraday lows before midday.

The market reacted bearishly to Sunday's announcement by OPEC and its allied producers that the group would start to unwind some of its voluntary production cuts in the fourth quarter. The move will come at a measured pace and could be modified depending on market conditions, OPEC+ said.

A mass exodus in long crude positions appears to be at hand, though an argument could be made that the liquidation began late last week. Open interest in the NYMEX West Texas Intermediate contract dropped by more than 30,000 lots through Friday. Monday's selling helped to push prices for WTI and Brent to their lowest levels since early February.

The NYMEX July WTI contract fell as low as $74.20/bbl in morning trade and was down by $2.57 to $74.42/bbl near midday. August Brent, which moved to the front-month position, fell as low as $78.40/bbl and was at $78.45/bbl near midday.

Refined product futures' declines were outpacing those for crude, putting more pressure on crack spreads.

The NYMEX July ULSD contract was off by about 8cts to $2.3035/gal near midday, fractionally above the morning low of $2.3019/gal. That was the lowest price for the contract in more than a year.

The deep slide in ULSD is helping to widen the market contango as the NYMEX July 2025 ULSD contract is more than 5cts above the prompt month.

RBOB futures were approaching 8ct/gal declines as the July RBOB contract at $2.3409/gal marked a low not seen since late February. The July RBOB contract was down about 7.5cts to $2.3434/gal at midday.

The steeper declines in refined product futures pushed the NYMEX 3:2:1 crack spread below $23.50/bbl.

U.S. cash gasoline prices in some U.S. markets are even weaker. The Gulf Coast conventional blendstock is running only at about $8.50/bbl above sweet crude in Houston.


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 Jeff Barber, jbarber@opisnet.com


(END) Dow Jones Newswires

06-03-24 1255ET