Crude oil and refined products futures were seeing losses of between 0.7% (RBOB) and 1.5% (WTI) as of this writing in the overnight session on Tuesday, amid weakness in equities and concern over the coronavirus situation in India, despite a neutral to supportive monthly oil market report from OPEC and some weakness in the US dollar. Market participants had a quiet day on the economic calendar before them, with just the US Job Openings and Labor Turnover Survey, and would have to look elsewhere for direction – likely keeping an eye out for developments related to the Colonial Pipeline system.
Reuters reports that the Russian embassy in the US made a statement rejecting claims that Moscow had any responsibility for the ransomware cyberattack on Colonial Pipeline. The company’s main lines are still shut for a fifth day, although it said yesterday that it hoped to resume operations this week. The FBI has pointed to a group called DarkSide as being behind the attack. Reuters shipping data indicate that refiners have booked at least four tankers to store refined products in the Gulf following the pipeline shutdown.
OPEC released its monthly report on the oil market, and kept its 2021 global oil demand growth forecast steady at 5.95mb/d, while also raising its 2021 economic growth forecast by 0.1 percentage points to 5.5%. While OPEC noted “severe COVID-19-related challenges” in India, it said it expects the country to “continue improving its momentum again in the second half of 2021.” In separate news from Reuters, India’s largest refiner – Indian Oil Corp – has cut runs from about 95% of capacity to between 85% and 88% amid weakened demand with lockdowns in several states across the country.
Weakness in global shares this morning was likely weighing on the petroleum futures price action. While the Shanghai Composite edged up 0.40% amid tame inflationary data (the CPI rose 0.9% year-on-year in April, under the 1.0% consensus forecast), the Hang Seng dropped 2.03% and the Nikkei took a 3.08% tumble. The losses in Tokyo came despite a 7.2% jump in Japanese household spending in March, accelerating from a 2.4% rise in February. European shares were selling off this morning, with losses of over two percent in the CAC 40, DAX, and FTSE 100. Italian industrial production, rather than rising 0.4% as predicted, dropped 0.1% in March. The ZEW survey in Germany showed sentiment on current conditions (-40.1) is weaker than expected, but that expectations for the future (84.4) are stronger than predicted. US stock market index futures were in the red, but losses were smaller than in the European indexes, with Dow futures off 0.4%, S&P 500 futures down 0.9%, and Nasdaq futures having lost 1.6%. The US dollar index was down 0.14%, which is supportive for crude.
The complex settled just north of unchanged on Monday, with the Colonial Pipeline shutdown supporting crack spreads, but with weakness in US and European shares likely helping limit the upside. Brent crude closed up just 4 cents at $68.32/bbl and WTI added 2 cents to settle at $64.92/bbl. RBOB settled 65 points stronger at $2.1334/g, and ULSD (HO) settled at $2.0166/g, up 60 points. Per Platts, New York Harbor ULSD barge prices strengthened by 60 points against NYMEX HO, putting the differential at +1.00c/g. Meanwhile, the ULSHO differential weakened by 50 points to -19.50c/g and the HSHO differential held steady at -26.00c/g. May propane prices strengthened yesterday, with Mt. Belvieu non-LST up 50 points to 80.250c/g and LST prices at the hub up 87.5 points to 80.375c/g. Conway spots rose 25 points to 78.000c/g.
NYMEX natural gas futures slipped 2.6 cents lower to settle at $2.932/mmBtu yesterday with a slightly weaker two-week degree day forecast (GFS). All is quiet in the Atlantic this morning, with the National Hurricane Center expecting no tropical cyclone activity over the next 48 hours.
