NEWS
Petroleum futures looked set to extend their rally to a fourth consecutive session as of this writing in the overnight session on Thursday, amid a continued rise in global shares and a further depreciation in the US dollar. Economic data from Europe were neutral to supportive, and market participants looked ahead to US housing and labor market data, as well as to Philadelphia-area manufacturing figures, for further direction.
Asian shares strengthened overnight, with the Nikkei adding 0.2%, the Hang Seng climbing 0.8%, and the Shanghai Composite rallying 1.1%. In European news, the Harmonized Index of Consumer Prices (HICP) for the Eurozone fell 0.3% last month, as expected. Also neutral was the Bank of England policy announcement, which brought no changes to monetary policy settings. There was some slightly positive news from France, where the INSEE Business Climate Indicator strengthened unexpectedly this month to 93 from 92. The CAC 40 was up 0.4% as of this writing, and the DAX was extending its rally with a 0.8% gain. The FTSE 100 continued to lag, up just 0.1%. Market participants looked ahead to US housing starts and permits data for November, expected to come in at annualized rates of 1.530m and 1.553m, respectively, as well as weekly initial jobless claims, seen falling to 806,000 in the week ended December 12. Also on the calendar today is the Philadelphia Fed Manufacturing Index, expected to fall from 26.3 to 21.1 this month. US stock market index futures were rising this morning, with Dow futures up 0.4% and both Nasdaq and S&P 500 futures up 0.5%. Also supportive for crude futures, the US dollar index was down 0.6% and at its weakest since April 19, 2018.
The complex posted mostly modest gains on Wednesday, its third session higher, amid a supportive weekly EIA inventory report, weakness in the US dollar, and strength in equities. There seemed to be little reaction to the monetary policy announcement from the Federal Open Market Committee, which brought no change to monetary policy settings and was consistent with market expectations. WTI futures added 20 cents, settling at $47.82/bbl, and Brent crude futures closed 32 cents higher at $51.08/bbl. RBOB futures gained 2.61 cents for a $1.3529/g settlement, while ULSD (HO) settled 1.35 cents stronger at $1.4779/g. New York Harbor ULSD barge price differentials to spot NYMEX strengthened by 10 points to -0.40c/g yesterday, according to Platts, while HSHO and ULSHO differentials held steady at -15.30c/g and -8.40c/g, respectively. Spot propane prices, per Platts, strengthened yesterday. Mt. Belvieu LST prices climbed 2.5 cents higher to 63.750c/g and non-LST prices increased by 1.75 cents to 63.250c/g. Conway spots jumped 2.75 cents higher to 59.750c/g. Weekly inventories from the EIA were supportive, showing a sharper than expected draw from combined propane and propylene stockpiles during the week ended December 11.
Natural gas futures on NYMEX edged down 50 points to $2.677/mmBtu yesterday. A weaker two-week heating degree day forecast and loosening picture of next week’s US market balance were unsupportive. The Midwest is expected to see above-normal temperatures in both the 1-5 and 6-10 day periods, per the latest ECMWF outlooks, but below-normal temperatures are expected along the East Coast over the next 5 days. The EIA is due to release its natural gas storage report for the week ended December 11 this morning, and analysts polled by Reuters expect to see a 120bcf withdrawal. This would be well above both the 97bcf drop seen last year and the 105bcf five-year average withdrawal.