Petroleum futures were seeing further gains of over 1.5 percent as of this writing in the overnight session on Friday amid further strength in global equities but despite a slight appreciation in the US dollar index and tightening coronavirus restrictions in Europe. Market participants looked ahead to data on the US and Canadian labor markets for further direction.
Japanese household spending rose 1.1% year-on-year in November, well short of the 2.5% consensus forecast. Nevertheless, the Nikkei followed US and European shares higher last night, rallying 2.4%. The Hang Seng also strengthened, up 1.2%, but the Shanghai Composite slipped 0.2% lower. In European news, stronger than expected November German industrial production growth of 0.9%, a narrowing of the French merchandise trade deficit in November to E3.56bn, and a smaller than expected 0.9% drop in French industrial production the same month were supportive. On the other hand, the German merchandise trade surplus narrowed to E16.4bn in November, French manufactured goods consumption saw a sharper than predicted tumble of 20.3% that month, and the UK Halifax House Price Index for December showed slower than expected appreciation of 0.2%. This morning’s headline item, however, was a positive. The Eurozone unemployment rate, expected to rise from 8.4% to 8.5% in November, instead saw a surprise drop to 8.3%. The FTSE 100 was off 0.1%, but the CAC 40 was up 0.5% and the DAX had gained 0.7% as of this writing. These gains came despite Reuters reports that the Oxford stringency index indicates very tight restrictions in many European countries, including Italy, Greece, the UK, and Spain, and that mobility rates are falling in London and Rome back to near spring lockdown levels.
US stock market index futures were rising this morning, with futures for the Dow and S&P 500 each up 0.3%, and Nasdaq futures up 0.5%. The US dollar index was just north of the unchanged mark as of this writing. Market participants looked to the Canadian Labor Force Survey, expected to show a drop of 28,000 in employment and a rise of 0.1 percentage points to 8.6% in the unemployment rate in December, as well as to the closely-watched US Employment Situation Report for the same month. US nonfarm payrolls are expected to see a relatively small rise of 50,000, with the unemployment rate (U-3) rising by 0.1 percentage points to 6.8%.
The complex posted further, modest gains yesterday, with strength in US and European shares likely providing support, whereas a rebound in the US dollar index may have helped cap gains. Brent crude edged up 8 cents to $54.38/bbl, and WTI crude futures added 20 cents to settle at $50.83/bbl. RBOB futures edged up 77 points, settling at $1.4827/g, and ULSD (HO) settled 94 points stronger at $1.5381/g. According to Platts, New York Harbor HSHO barge price differentials to NYMEX weakened by 75 points to -14.50c/g yesterday, while the ULSHO and ULSD price differentials held steady at -10.00c/g and -0.25c/g, respectively. Propane prices strengthened along with crude yesterday. Mt. Belvieu LST prices shot up 4.250 cents to 85.00c/g, according to Platts, and non-LST prices rallied 4.375 cents to 83.625c/g. Conway prices saw slimmer, but still sizeable gains of 3.000 cents to hit 81.000c/g.
Natural gas futures on NYMEX edged up 1.3 cents yesterday, settling at $2.729/mmBtu, despite an unsupportive weekly EIA storage report and some slight moderation in the two-week temperature outlook. The latest ECMWF outlooks point to well-above-normal temperatures in the Midwest over the next 10 days, and above-normal temperatures in the Northeast during the same period.
