Petroleum futures were seeing modest gains of under one percent as of this writing in the overnight session on Wednesday, with bullish US crude oil inventory data from the American Petroleum Institute (API) likely supporting, whereas rising case counts and tightening restrictions in China, as well as further strength in the US dollar were unsupportive, and trade in global shares was mixed. Market participants looked ahead to US consumer price inflation data and to the weekly inventory report from the Energy Information Administration (EIA) for further direction.
The API reported a 5.8mb draw from US crude stocks for the week ended January 8, well above the 3.0mb predicted by analysts (average of polls by Reuters and S&P Global Platts). Data for distillates were unsupportive, as the group reported a 4.4mb build against expectations for a 2.7mb rise, whereas gasoline stock data were neutral to supportive. API figures showed a 1.9mb gasoline build, short of forecasts at 3.0mb. According to API, Cushing, OK crude oil inventories fell by 0.23mb during the reporting week. The more closely watched EIA report is due at 10:30 this morning.
Reuters reports that China saw its largest daily increase in coronavirus cases since July today, and that four cities have now been locked down to try to combat the spread. The Shanghai Composite fell 0.3%, and the Hang Seng shed 0.2%. The Nikkei, on the other hand, gained 1.0%. European shares were trading near to and on both sides of the unchanged mark this morning despite favorable Eurozone industrial production figures for November. Output in the Eurozone increased by 2.5% in November, well above expectations at 0.3% and coming with a 0.2 percentage point upward revision to October production growth, to 2.3%. The CAC 40 was up 0.1%, but the FTSE 100 and DAX were both down by 0.1% as of this writing. Futures for the major US stock market indexes were seeing similar losses of about 0.1%, while the US dollar index was up 0.2%, both unsupportive for crude.
The complex posted gains of over one percent across the board on Tuesday, despite weakness in US and European shares and indications that OPEC+ compliance fell in December, as well as a generally bearish monthly oil market report release from the EIA. The US dollar did depreciate against a basket of currencies, which was supportive for crude. Brent gained 92 cents, closing at $56.58/bbl, and WTI settled 96 cents stronger at $53.21/bbl. RBOB futures settled at $1.5530/g after a 3.22-cent gain, and ULSD (HO) settled 2.32 cents higher at $1.5967/g. New York Harbor ULSD and ULHO barge prices strengthened against spot NYMEX, according to Platts, with the ULSD barge price differential up 10 points to -0.30c/g and the ULSHO differential up 50 points to -10.00c/g yesterday. The HSHO differential held steady at -15.75c/g. Propane prices continued to climb yesterday. According to Platts, Mt. Belvieu LST prices strengthened 87.5 points to 88.625c/g, non-LST prices jumped one cent higher to 87.000c/g, and Conway prices shot up 1.375 cents to 85.375c/g.
NYMEX natural gas futures were little changed on Tuesday, edging up 60 points to settle at $2.753/mmBtu. The 1-5 day outlook (ECMWF) remains unsupportive, with large deviations above normal temperatures seen as likely in both the Midwest and the Northeast. The 6-10 day outlook sees above-normal temperatures in the Midwest and mixed but mostly above-normal temperatures on the East Coast. The 11-15 day outlook is more supportive.
