Crude futures were trading flat to higher in the overnight session on Wednesday amid gains in US and European equities and continued weakness in the US dollar, despite bearish US crude oil inventory data from the American Petroleum Institute (API). Market participants looked ahead to US retail sales, the flash Markit Composite PMI, the NAHB Housing Market Index, and the Canadian CPI, as well as the weekly EIA inventory report for further direction.
The API reported a 2.00mb build in US crude oil stockpiles for the week ended December 11, while expectations called for a 1.92mb draw (average of polls by Reuters and S&P Global Platts). Data for distillates were bearish as API showed a 4.80mb rise in distillate stocks, well above forecasts calling for a 0.99mb build. The API figures were supportive for gasoline as the industry group reported a smaller than expected build of 0.83mb in gasoline inventories (vs 2.11mb). Cushing, OK crude oil inventories fell by 0.17mb last week, per API. The more closely watched EIA report is due at 10:30am.
The Japanese merchandise trade balance was in a surplus of Y366.8bn last month, but well below expectations calling for a surplus of Y530.0bn. The flash December Markit Composite PMI for Japan came in at 48.0, slightly down from an upwardly-revised 48.1 last month. Despite unsupportive economic data releases from Japan, Asian stock markets closed flat to higher overnight with the Shanghai Composite edging down 0.01%, while the Nikkei rose 0.26% and the Hang Seng added 0.97%.
In European economic news, the flash December Composite PMI from Markit for the Eurozone came in at 49.8, above expectations at 45.6 and up from 45.1 last month. The flash Composite PMI for both France and Germany were a beat with the index for France coming in at 49.6 (vs 41.1) and the index for Germany rising to 52.5 (vs 51.0). On the other hand, the flash Composite PMI for the UK came in at 50.7, below the 51.3 Econoday consensus, but up from 47.4 in November. Also unsupportive, the Consumer Price Index in the UK fell 0.1% last month, while forecasts called for a 0.1% rise. The Producer Price Index (PPI) in the UK for the same month showed a 0.2% increase in output prices (matching expectations), while input prices fell 0.5% (forecasts called for a 0.1% rise). As of this writing, the CAC 40 was up 0.4%, the FTSE 100 had added 0.9%, and the DAX had rallied 1.5%. US stock market index futures were seeing gains of between 0.2% (Nasdaq f, Dow f) and 0.3% (S&P f). Also supportive for crude oil prices, the US dollar index was down 0.3% this morning.
Petroleum futures rose yesterday amid gains in equities and weakness in the US dollar, despite a bearish revision to its oil demand forecast by the International Energy Agency. WTI crude settled 63 cents higher at $47.62/bbl and Brent crude added 47 cents to close at $50.76/bbl. RBOB futures edged up 77 points and settled at $1.3268/g and ULSD (HO) rose one cent to $1.4644/g. According to Platts, New York Harbor ULSHO barge differentials to NYMEX strengthened by 25 points to -8.40c/g, while ULSD barge differentials weakened by 10 points to -0.50c/g. Propane prices rose along with crude yesterday, per Platts, as Mt. Belvieu LST prices added 1.250 cents to 61.250c/g and non-LST prices rose 1.625 cents to 61.500c/g. Conway spot prices also rose by 1.625 cents, averaging 57.000c/g.
NYMEX natural gas futures settled flat at $2.682/mmBtu on Tuesday despite mostly unsupportive data. The latest 1-5 day forecast (EC) calls for mostly above-normal temperatures in the Midwest, while below-normal temperatures are expected on the East Coast. The 6-10 day outlook sees above-normal temperatures across the majority of the country.
