Petroleum futures looked set to strengthen for a third consecutive session in the overnight session on Wednesday amid bullish US crude oil inventory data from the American Petroleum Institute (API) and strength in European equities and in US stock market index futures. Market participants awaited US economic news in the form of the ADP Employment report, the ISM Services Index, and the weekly EIA inventory report for further direction.
The API reported a 7.70mb draw from US crude oil stockpiles for the week ended April 30, while expectations called for a smaller decline of 3.12mb (average of polls by Reuters and S&P Global Platts). Data for distillates and gasoline were also bullish as API showed a 3.50mb draw from distillate stocks, above forecasts calling for a 1.36mb decline, and the industry group reported a draw from gasoline inventories of 5.30mb, whereas expectations called for a 0.58mb decrease. The more closely watched EIA report is due at 10:30am.
The Hang Seng fell 0.5%, while the Tokyo and Shanghai exchanges were closed, for Children's Day and Labor Day, respectively. In European news, the final Eurozone April Composite PMI (Markit) came in at 53.8, just above expectations at 53.7. The Composite PMI in France came in at 51.7, shy of expectations at 51.7 and the index for Germany came in at 55.8, also missing the 56.0 consensus. The Producer Price Index in the Eurozone rose 1.1% in March, matching expectations. As of this writing, the CAC 40 was up 0.8%, the FTSE 100 had added 1.1%, and the DAX had rallied 1.3%. US stock market index futures were seeing gains of between 0.2% (Dow f) and 0.6% (Nasdaq f). The US dollar index was down 0.05%, which is supportive for crude.
Petroleum futures strengthened further yesterday despite losses in equities and strength in the US dollar. WTI crude rose $1.20 to settle at $65.69/bbl and Brent crude gained $1.32 to close at $68.88/bbl. RBOB futures added 4.97 cents, settling at $2.1512/g, and ULSD (HO) futures jumped 4.69 cents to $1.9988/g. According to Platts, the New York Harbor HSHO barge differential to NYMEX weakened by 15 points to -26.00c/g, while ULSHO and ULSD barge differentials held steady at -17.75c/g and +0.15c/g, respectively. Also per Platts, May propane prices rose along with crude prices on Tuesday as Mt. Belvieu non-LST prices rose one cent to 81.500c/g and LST prices added 1.75 cents to 82.000c/g. Conway spot prices rose by 75 points to 78.000c/g.
Natural gas futures edged up 10 points to settle at $2.967/mmBtu with a stronger two-week total degree day forecast and a tighter market balance expectation for next week likely supporting. The National Hurricane Center sees no tropical cyclones in the Atlantic in the next 48 hours.
