Crude oil and refined products futures were falling back after yesterday’s rally, despite weakness in the dollar and flat to higher trade in equities with the possibility of a Brexit trade agreement between the European Union and the United Kingdom. Market participants had a quiet day on the economic calendar before them.
Asian shares closed mixed but mostly higher overnight. The Hang Seng added 0.2% and the Nikkei rose 0.5%, and while the Shanghai Composite fell 0.6%, the Asia Dow rose 0.4%. Reuters reports that there is the possibility of a last-minute narrow trade agreement between the EU and the UK, with the transition period for Britain’s exit from the EU ending at 11:00pm on December 31. An announcement is expected today. European markets are closed today. US stock market index futures were seeing modest gains of between 0.1% (Nasdaq f) and 0.2% (Dow and S&P 500 futures). Also supportive for oil prices, the US dollar index was down by 0.2%.
In US news, House Democrats are expected to try for quick passage of a $2,000 direct payment to Americans as part of a coronavirus relief package, following the President’s surprise suggestion that he would veto the current bill that Congress approved with a $600 direct payment. The measure was attached to a $1.4 trillion government funding bill for the fiscal year ending September 30.
The complex rallied to gains of over two percent yesterday with strength in equities and weakness in the US dollar, with supportive US products stock data in the weekly EIA report (despite bearish crude oil inventory figures). WTI climbed $1.10 higher to settle at $48.12, and Brent crude closed $1.12 stronger at $51.20/bbl. Crack spreads widened, with RBOB jumping 4.25 cents higher and settling at $1.3820/g, and with ULSD strengthening 3.59 cents for a $1.4975/g settlement price. New York Harbor ULSD barge prices weakened by 5 points against spot NYMEX, back to parity, while HSHO and ULSHO barge price differentials were steady at -15.30c/g and -8.75c/g, respectively, according to Platts. Propane prices strengthened along with crude yesterday, with Platts putting non-LST Mt. Belvieu prices up 1.125 cents at 69.125c/g, LST prices at the hub up 1.125 cents at 70.125c/g, and Conway spots up 1.750 cents at 67.000c/g. Weekly EIA propane/propylene inventories were neutral, showing a draw of the expected size. Gulf Coast stocks remained at a deficit to their five-year average (whereas Midwestern inventories now enjoy a surplus over their historical average for the week).
NYMEX natural gas futures dropped 17.2 cents lower to settle at $2.608/mmBtu on Wednesday, with a higher rig count, smaller than expected withdrawal from storage in the weekly EIA report, and a loosening picture of the US market balance for next week. Futures were falling further as of this writing in the overnight session on Thursday. The Northeast is expected to see large deviations in temperatures above normal over the next 5 days, while more mixed and near-normal temperatures are expected in the Midwest. The latest ECMWF 6-10 day forecast sees slightly above-normal temperatures across the eastern half of the country.
