Petroleum futures were little changed and mixed on both sides of the unchanged mark as of this writing in the overnight session on Tuesday, with strength in equities and weakness in the US dollar likely providing support, whereas the monthly oil market report from the International Energy Agency brought bearish global oil demand forecast revisions. Market participants looked ahead to data on Canadian housing starts and manufacturing sales, as well as US industrial production and New York-area manufacturing index for further direction. The two-day Federal Open Market Committee meeting begins today.
Economic data from China were neutral to unsupportive, as fixed asset investment growth of 2.8% in November was a slowdown from a downwardly-revised 2.93% rise in October, industrial production growth of 7.0% matched expectations, and retail sales growth of 5.0% matched expectations as well. The Shanghai Composite shed 0.1% overnight, while the Hang Seng and Nikkei saw larger losses of 0.7% and 0.2%, respectively. European shares were mostly higher this morning despite tightening restrictions to combat the coronavirus and a higher than expected unemployment claimant count in the UK last month. The count rose by 64,300 in November, well above the expectation of 45,000. However, claimant count unemployment of 7.4% was below the 7.5% consensus, as was the ILO Unemployment rate at 4.9% (versus 5.1% predicted) and yearly average earnings growth of 2.7% was stronger than expected as well. Nevertheless, the FTSE 100 was down 0.4% as of this writing, perhaps with news of tighter restrictions in London with bars and restaurants set to close. The CAC 40 was up 0.3% and the DAX had gained 0.7% as of this writing. US stock market index futures were rising, with gains of 0.4% in Nasdaq futures, 0.5% in Dow futures, and 0.6% in futures for the S&P 500. Also supportive for crude oil, the US dollar index was down 0.1%.
The International Energy Agency says that there is “understandable euphoria” as vaccinations get underway, but that “it will be several months before we see an impact on oil demand.” The Paris-based agency sees global oil demand fairly steady near 95mb/d through the second half of next year, rising in the third quarter, as it will take time to “reach a critical mass of vaccinated, economically active people.” The agency revised down its 2020 oil demand forecast by 50kb/d and trimmed its 2021 forecast by 170kb/d, mostly with a weaker outlook for jet fuel demand.
The complex ended a see-saw session slightly higher on Monday, with geopolitical tensions, strength in equities, and weakness in the US dollar supporting, whereas a bearish monthly oil market report from OPEC likely weighed on the price action. Brent crude added 32 cents, closing at $50.29/bbl, and WTI settled 42 cents higher at $46.99/bbl. RBOB futures settled up 1.14 cents at $1.3191/g, and ULSD (HO) settled at $1.4544/g, up 1.75 cents. New York Harbor barge price differentials to NYMEX were flat to stronger yesterday, according to Platts. HSHO barge prices held steady at -15.30c/g to spot NYMEX, but the ULSHO differential strengthened by 35 points to -8.65c/g and the ULSD differential added 10 points to reach -0.40c/g. Platts cited expectations for cold temperatures with a winter storm watch for parts of New York and Pennsylvania. Spot propane prices, per Platts, strengthened yesterday. Mt. Belvieu LST prices climbed 1.125 cents higher to 60.000c/g, non-LST prices gained 37.5 points to hit 59.875c/g, and Conway prices rose 37.5 points to 55.375c/g.
Natural gas futures on NYMEX gained 9.1 cents, settling at $2.682/mmBtu yesterday with a stronger two-week heating degree day forecast. The latest 1-5 day ECMWF outlook calls for below-normal temperatures on the East Coast, with particularly large deviations below normal in the Northeast. The Midwest is expected to see more mixed temperatures, with above-normal levels near the western Great Lakes. The 6-10 day forecast calls for above-normal temperatures across most of the country, with larger deviations above normal in the Midwest.
