Petroleum futures were trading in the black in the overnight session on Wednesday amid news that OPEC+ could keep its current production levels for next month rather than raise output and gains in European shares and in US stock market index futures, despite strength in the US dollar and bearish US crude oil inventory data from the American Petroleum Institute (API). Market participants awaited US economic news in the form of the ADP Employment report, the ISM Service Index, and the final reading of the Markit Composite PMI for February, as well as the weekly EIA inventory report for further direction.
Reuters reports that OPEC+ is considering rolling over production cuts into April instead of raising output by around 500kb/d, according to three OPEC+ sources. Sources stated that this is due to oil demand being fragile due to the pandemic. OPEC+ ministers are set to meet tomorrow.
The API reported a 7.40mb build in US crude oil stockpiles for the week ended February 26, while expectations called for a smaller increase of 0.19mb (average of polls by Reuters and S&P Global Platts). Data for products were bullish as API showed a 9.10mb drop in distillate stocks, while forecasts called for a smaller decline of 3.47mb, and a 9.90mb draw from gasoline stockpiles, well above expectations calling for a 2.60mb decrease. Cushing, OK crude oil inventories rose by 0.73mb last week, per API. The more closely watched EIA report is due at 10:30am.
The Chinese Composite PMI (Caixin) came in at 51.7 last month, down from 52.2 in January. Despite unsupportive economic data, Asian stock markets closed higher overnight with the Nikkei up 0.5%, the Shanghai Composite adding 2.0%, and the Hang Seng rallying 2.7%. In European news, the final Eurozone February Composite PMI (Markit) came in at 48.8, above expectations at 48.1. Additionally, the Composite PMI in France came in at 47.0, beating expectations at 45.2. On the other hand, the German Composite PMI came in at 51.1, just below the 51.3 consensus. The UK CIPS/Markit Services PMI came in at 49.6, missing forecasts at 49.8. Back in a plus column, the Eurozone PPI rose 1.4% in January, above the Econoday consensus at 1.0%. Italian GDP for the fourth quarter fell 1.9%, while forecasts called for a sharper decline of 2.0%. European shares were trading in the black this morning with the CAC 40 up 0.6%, the FTSE 100 having added 0.8%, and the DAX having gained 0.9%. As of this writing, US stock market index futures were seeing gains of around 0.6%. In unsupportive news, the US dollar index was up 0.15%.
The complex weakened on Tuesday amid mostly lower trade in US equities, despite strength in European shares and weakness in the US dollar. Brent lost 99 cents to settle $62.70/bbl and WTI fell 89 cents to close at $59.75/bbl. RBOB futures edged down 65 points, settling at $1.9364/g and ULSD (HO) closed 1.11 cents lower at $1.8081/g. Per Platts, the New York Harbor ULSD barge differential strengthened by 30 points to +0.20c/g, while HSHO and ULSHO differentials held steady at -18.25c/g and -12.50c/g, respectively. March propane prices made mixed moves yesterday, according to Platts, with Mt. Belvieu non-LST prices up 25 points to 97.250c/g and LST prices adding one cent to 97.375c/g. On the other hand, the Conway spot price fell 2.25 cents to 89.750c/g.
Natural gas futures settled 6.2 cents higher at $2.839/mmBtu despite a looser US market balance expectation for next week. The latest 1-5 day ECMWF outlook calls for mostly above-normal temperatures in the Midwest, while below-normal temperatures are expected in the Northeast. The 6-10 day forecast sees above-normal temperatures in both consuming regions.
