Petroleum futures were trading in the black in the overnight session on Wednesday amid weakness in the US dollar index, despite losses in European shares, mixed trade in US stock market index futures, and unsupportive US crude oil inventory data from the American Petroleum Institute (API). Market participants awaited the Bank of Canada’s monetary policy announcement and the weekly inventory report from the Energy Information Administration (EIA) for further direction.
The API reported a 2.10mb draw from US crude oil stockpiles for the week ended June 4, below expectations calling for a decrease of 3.07mb (average of polls by Reuters and S&P Global Platts). Data for distillates and gasoline were bearish as API showed a higher-than-expected build of 3.80mb in distillate stocks (vs. 0.88mb), and the industry group reported a 2.00mb increase in gasoline inventories, whereas expectations called for a build of 0.85mb. The more closely watched EIA report is due at 10:30am.
The Chinese Producer Price Index rose 9.0% year-on-year last month, above expectations at 8.3%. On the other hand, the Consumer Price Index in China rose 1.3% y/y in May, below the Econoday consensus at 1.5%. The Shanghai Composite closed 0.3% higher, while the Hang Seng edged down 0.1% and the Nikkei fell 0.4%. In European news, the German merchandise trade surplus widened from E14.0bn to E15.9bn in April, but did not quite reach the E19.5bn consensus. European stock markets were trading in the red this morning with the CAC 40 down 0.2%, the FTSE 100 having lost 0.7%, and the DAX having dropped 0.8%. As of this writing, US stock market index futures were trading mixed with futures for the Dow down 0.1%, while S&P 500 futures were steady and futures for the Nasdaq had edged up 0.2%. The US dollar index was down 0.1%, which is supportive for crude prices.
Petroleum futures rebounded yesterday with gains of around one percent despite strength in the US dollar, mixed trade in equities, and a bearish revision to the 2021 global oil demand forecast in the EIA’s STEO. WTI crude rose 82 cents to settle at $70.05/bbl and Brent crude added 73 cents to close at $72.22/bbl. RBOB futures rose 2.59 cents, settling at $2.2190/g and ULSD (HO) futures gained 1.94 cents to $2.1350/g. According to Platts, the New York Harbor HSHO barge differential to NYMEX strengthened by 50 points to -32.75c/g, while the ULSHO barge differential weakened by 50 points to -22.25c/g. The ULSD barge differential held steady at +0.10c/g. Also per Platts, June propane prices rallied on Tuesday as Mt. Belvieu non-LST prices rose 2.000 cents to 93.500c/g and LST prices jumped 2.250 cents to 93.500c/g as well. Conway spot prices added 2.000 cents to 90.750c/g.
Natural gas futures rose 5.8 cents to settle at $3.128/mmBtu amid a higher nuclear power outage rate, a stronger two-week cooling degree day forecast, and a tighter US market balance expectation for next week. The National Hurricane Center sees no tropical cyclones in the Atlantic in the next 48 hours.
