Weekly Gains Loom for Oil Futures Amid Middle East Tensions

Midday Friday showed promising signs for the energy sector, with crude oil and refined product futures gearing up for weekly advances. The New York Mercantile Exchange (NYMEX) contracts were buoyed as geopolitical tensions in the Middle East continued to escalate, influencing market dynamics.

Rise in Oil and Refined Product Prices

Fuel prices displayed an uptick across the board. Crude oil prices surged past the one-dollar mark per barrel, whereas diesel prices experienced a slight increase of over a cent per gallon. Although gasoline futures were escalating, the rise was tempered by concerns regarding subdued demand during the winter months, together with steady production from refineries.

Geopolitical Concerns Affect Market Sentiment

Market sentiment was particularly swayed by the U.S. Secretary of State Antony Blinken's visit to the Middle East, which aimed at addressing and containing the risks of conflict expansion, especially between Israel and Hamas. Despite the Energy Information Administration's recent report indicating a strong build-up in U.S. diesel and gasoline inventories, the traders seemed more focused on the potential consequences of a violent escalation in the region.

Contracts Showing Strong Performance

A tangible reflection of these market forces was evident in the performance of several futures contracts. For instance, the NYMEX February West Texas Intermediate crude contract increased by $1.53, bringing it to $73.72 per barrel, with the March contract closely trailing at $1.54 up, positioned at $73.90 per barrel. Prices for Brent crude for March and April delivery also experienced a bump. As for refined products, both the ULSD and RBOB contracts saw positive movement, with the latter showing over a 2-cent gain since settling on December 29th.

Variability in U.S. Spot Prices

Notably, while U.S. spot prices for diesel followed the upward momentum provided by the futures market, gasoline prices exhibited more variation. Significant price declines occurred in regions like California, contrasting with notable increases along the Gulf Coast.

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