Crude futures were trading in the black while product futures were falling in the overnight session on Wednesday, indicating a further widening of crack spreads. Bullish US crude oil inventory data from the American Petroleum Institute (API) and bearish gasoline and distillate stockpiles data were consistent with the price action. Market participants awaited the Canadian CPI, US housing starts and permits data, the weekly EIA inventory report, and the US FOMC policy announcement for further direction.
The API reported an 8.50mb draw from US crude oil stockpiles for the week ended June 11, well above expectations calling for a 3.75mb decrease (average of polls by Reuters and S&P Global Platts). Data for distillates and gasoline were bearish as API showed a 1.96mb build in distillate stocks, above forecasts at 0.19mb, and the industry group reported a surprise 2.85mb rise in gasoline inventories, whereas expectations called for a decline of 0.31mb. The more closely watched EIA report is due at 10:30am.
Japanese machinery orders rose 6.5% y/y in April, missing consensus calling for an 8.0% increase. Also unsupportive, the Japanese merchandise trade balance was in a deficit of Y187.1bn last month, well below expectations calling for a deficit of Y90.0bn. The Nikkei closed 0.5% lower overnight. Economic data releases from China were also unsupportive. Fixed asset investment saw a rise of 15.4% year-on-year in May, below forecasts at 16.8%. Retail sales jumped 12.4% y/y last month, missing the Econoday consensus at 14.0%. Industrial production saw an 8.8% y/y growth last month, just shy of the 8.9% consensus. The Shanghai Composite lost 1.1% and the Hang Seng fell 0.7%.
In UK news, the Consumer Price Index rose 0.6% last month, above forecasts at 0.3%. The Producer Price Index (PPI) in the UK for the same month showed a 0.5% increase in output prices (consensus at 0.4%) and a 1.1% rise in input prices (matching expectations). As of this writing, the FTSE 100 was up 0.05% and the CAC 40 had edged up 0.06%, while the DAX was down 0.20%. US stock market index futures were seeing a similar trade with futures for the S&P 500 and the Dow down 0.05% and 0.14%, respectively, while Nasdaq futures had edged up 0.07%. The US dollar index was flat this morning.
Crude futures saw gains of over 1.5 percent yesterday, while products settled mixed near the unchanged mark, with crack spreads widening. Gains in European shares were supportive, while US economic data releases and losses in US equities likely weighed on the price action. WTI crude rose $1.24 to settle at $72.12/bbl and Brent crude added $1.13 to close at $73.99/bbl. RBOB futures edged down 7 points, settling at $2.1705/g, while ULSD (HO) futures edged up 7 points to $2.1123/g. According to Platts, the New York Harbor ULSD barge differential to NYMEX weakened by 10 points to +0.00c/g, while the ULSHO barge differential strengthened by 1.25 cents to -19.75c/g. The HSHO barge differential held steady at -31.75c/g. Also per Platts, June propane prices were flat to higher on Tuesday as Mt. Belvieu non-LST prices rose one cent to 95.250c/g and LST prices added 37.5 points to 94.875c/g. Conway spot remained steady at 93.750c/g.
Natural gas futures fell 11.2 cents to settle at $3.240/mmBtu despite generally supportive developments. The National Hurricane Center is tracking a disturbance in the Gulf of Mexico, over the Bay of Campeche and southern Mexico, and gives it a 70% chance of cyclone formation in the next 48 hours.
