Petroleum futures looked set to strengthen for a fourth session in the overnight session on Wednesday amid a bullish revision to the global oil demand forecast in the IEA’s monthly report and mostly higher trade in European equities, despite losses in US stock market index futures, strength in the US dollar index, and bearish US crude oil inventory data from the American Petroleum Institute (API). Market participants awaited the US Consumer Price Index and India’s industrial production data for further direction.
The API reported a 2.50mb draw from US crude oil stockpiles for the week ended May 7, while expectations called for a larger decline of 3.46mb (average of polls by Reuters and S&P Global Platts). Data for distillates were neutral to unsupportive as API showed a 0.90mb draw from distillate stocks, below forecasts calling for a 1.54mb decline. Inventory figures were bearish for gasoline as the industry group reported a build in gasoline inventories of 5.60mb, whereas expectations called for an increase of just 0.05mb. The more closely watched EIA report is due at 10:30am.
The International Energy Agency said in its monthly report that oil demand is already outpacing supply and the shortfall is expected to widen even if Iran boosts exports and vaccinations against COVID-19 continue to support the global economy. The agency added that “the anticipated supply growth through the rest of this year comes nowhere close to matching our forecast for stronger demand beyond the second quarter”, citing increased production from OPEC+.
Asian stock markets closed mixed overnight with the Shanghai Composite and the Nikkei up 0.6% and 0.8%, respectively, while the Nikkei dropped 1.6%. In European economic news, industrial production in the Eurozone rose 0.1% in March, missing the Econoday consensus at 1.0%. The French Consumer Price Index rose 0.1% last month, just shy of expectations at 0.2%, while the CPI for Germany matched expectations by rising 0.7% in April. As of this writing, the German DAX was up 0.27%, while the French CAC 40 had edged down 0.08%. In UK news, the economy grew 2.1% in March, beating the 1.3% forecast, and February GDP was revised up from 0.4% to 0.7%. The preliminary first-quarter GDP estimate for the UK showed a 1.5% contraction, while the Econoday consensus called for a sharper decline of 1.7%. Industrial production grew 1.8% in March, well above expectations at 1.0%. The FTSE 100 was trading 0.37% higher this morning following the stronger than expected data. US stock market index futures were seeing losses of between 0.4% (Dow f, S&P f) and 0.6% (Nasdaq f), as of this writing. The US dollar index was up 0.16%, which is unsupportive for crude prices.
Petroleum futures strengthened further yesterday with the continued shutdown of the Colonial Pipeline system and weakness in the US dollar, despite losses in equities and a bearish revision to the 2021 global oil demand forecast in the EIA’s STEO. WTI crude rose 36 cents to settle at $65.28/bbl and Brent crude added 23 cents to close at $68.55/bbl. RBOB futures edged up 65 points, settling at $2.1399/g, and ULSD (HO) futures jumped 2.51 cents to $2.0417/g. According to Platts, the New York Harbor ULSHO barge differential to NYMEX strengthened by one cent to -18.50c/g, while HSHO and ULSD barge differentials held steady at -26.00c/g and +1.00c/g, respectively. Also per Platts, May propane prices made mixed moves on Tuesday as Mt. Belvieu non-LST prices fell 62.5 points to 79.625c/g, while LST prices rose 12.5 points to 80.500c/g. Conway spot prices rose by 50 points to 78.500c/g.
Natural gas futures added 2.3 cents to settle at $2.955/mmBtu despite a weaker two-week total degree day forecast and a looser market balance expectation for next week. The National Hurricane Center sees no tropical cyclones in the Atlantic in the next 48 hours.
