DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved little early Tuesday after Saudi Arabia's state-owned oil company Saudi Aramco left official selling prices for March loadings to Asia unchanged near a two-year low, while prices for European and U.S. markets were also largely unchanged.

The March price announcement could signal physical market fundamentals are not as robust as investors had anticipated heading into the spring months. Most market observers expected Saudi Aramco to lift its OSPs for Asian buyers by at least $0.50 over the Oman/Dubai average. Aramco made its biggest cut in 13 months to Asian OSPs for February cargo loadings.

For March loadings, Saudi Aramco set the official selling price for Arab Light to Asia at $1.50 barrel (bbl) over the Oman/Dubai average, unchanged from February.

For Northwest Europe, Arab Light was also left unchanged at $0.90 bbl over ICE Brent futures, while Arab Medium was held at a $0.20-bbl premium.

Arab Light cargoes to the U.S. Gulf Coast were set at a $7.10-bbl premium over ASCI (Argus Sour Crude Index) versus $7.15 bbl in February, while Arab Medium remained at a $5.85-bbl and Arab Heavy at a $5.40-bbl premium, respectively.

While OPEC+ continues to project strong demand fundamentals in 2024, Saudi Arabia, the de-facto leader of the group, depressed its crude output to a multi-year low 9 million barrels per day (bpd). Saudi Aramco's production capacity currently stands at 12 million bpd.

This mismatch raises doubts over the bullish demand outlook laid out by OPEC itself. In its latest Monthly Oil Market Report, OPEC forecast global oil consumption will expand by a healthy 2.2-million-bpd margin this year, with 2 million bpd of this growth realized in developing economies. For 2025, OPEC anticipates only a modest reduction in growth of 1.8 million bpd.

In financial markets, the U.S. dollar stalled near a 2 1/2-month high 104.325 early Tuesday, finding support from a slew of bullish U.S. macroeconomic indicators.

The Services Index released Monday by the Institute of Supply Management rose 2.9% to a four-month high 53.4% in January, driven mostly by faster growth for new orders, expanding employment and imports. All ten of the large service industries in the United States reported growth.

"Economic indicators generally look good; however, there is still some uncertainty. It would be amiss not to mention that we are still seeing the effect of people returning to offices, which impacts demand. Though demand has continually increased, it is not at pre-pandemic levels," said a representative from the transportation equipment industry.

During the post-pandemic years, there has been a growing disconnect between the strength of the U.S. economy and fuel demand that historically had a close correlation. For instance, while the labor market outperforms all expectations with neck-breaking job creation, gasoline consumption continues to lag far behind its pre-pandemic trend. U.S. gasoline consumption averaged 8.15 million bpd in the first four weeks of 2024, down from 8.9 million bpd in the comparable four weeks seen in 2019. For all of 2023, U.S. gasoline consumption averaged 4% below the 2019 consumption rate.

Near 7 a.m. EST, West Texas Intermediate futures for March delivery advanced $0.30 to $73.16 bbl, while international crude benchmark Brent April futures moved $0.44 higher to $78.42 bbl. NYMEX March RBOB futures jumped $0.0101 to $2.2193 gallon, while the March ULSD contract added $0.0185 to $2.7433 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com