Petroleum futures were extending their gains in the overnight session on Wednesday amid bullish US crude oil inventory data from the American Petroleum Institute (API) and weakness in the US dollar index. Market participants awaited US international trade in goods and services data, Canadian merchandise trade data, the Canadian Ivey PMI, and the weekly EIA inventory report for further direction.
The API reported a 2.6mb draw from US crude oil stockpiles for the week ended April 2, above expectations calling for a 1.07mb decline (average of polls by Reuters and IHS Markit). Data for distillates and gasoline were bearish as API showed a 2.80mb rise in distillate stocks, while forecasts called for a smaller increase of 0.49mb, and the agency reported a 4.60mb build in gasoline stockpiles, whereas expectations called for no change. The more closely watched EIA report is due at 10:30am. Reuters reported that Iran and world powers held “constructive” talks yesterday and agreed to form working groups to discuss the possibility of reviving the 2015 nuclear deal that could lift US sanctions on Iran’s energy sector. While no quick breakthroughs are expected, both governments and the EU described the early exchanges in positive terms.
Asian stock markets closed mixed overnight with the Nikkei up 0.1%, while the Shanghai Composite fell 0.1% and the Hang Seng lost 0.9%. In European news, the final Eurozone March Composite PMI (Markit) came in at 53.2, above expectations at 52.5. The Composite PMI in France came in at 50.0, beating expectations at 49.5. Additionally, the German Composite PMI came in at 57.3, also above the 56.8 consensus. On the other hand, the UK CIPS/Markit Services PMI came in at 56.4, missing forecasts at 56.6. As of this writing, the DAX was down 0.05%, while the CAC 40 was up 0.09% and the FTSE 100 had added 0.74%. US stock market index futures were steady this morning. The US dollar index was down 0.1%, which is supportive for crude oil prices.
Petroleum futures strengthened yesterday amid gains in European equities, weakness in the US dollar, and a bullish revision to the 2021 global oil demand forecast in the EIA’s STEO. WTI crude rose 68 cents to settle at $59.33/bbl and Brent crude added 59 cents to close at $62.74/bbl. RBOB futures edged up 52 points, settling at $1.9663/g, and ULSD (HO) futures rose 2.17 cents to $1.7941/g. According to Platts, the New York Harbor ULSD barge differential to NYMEX strengthened by 25 points to +0.10c/g, while the ULSHO barge differential weakened by 50 points to -15.25c/g. The HSHO differential held steady at -25.10c/g. Also per Platts, propane prices fell along with crude prices on Tuesday as Mt. Belvieu non-LST prices dropped 5.25 cents to 93.500c/g and LST prices lost 3.625 cents to 92.500c/g. Conway spot prices weakened by 50 points to 81.250c/g.
Natural gas futures fell 5.5 cents to settle at $2.456/mmBtu with a moderating temperature outlook. The latest 1-5 day ECMWF outlook calls for well-above-normal temperatures across the eastern half of the country. The 6-10 day forecast sees above-normal temperatures on the East Coast, while mixed and mostly below-normal temperatures are expected in the Midwest.
