Petroleum futures were trading in the black in the overnight session on Wednesday amid bullish US crude oil inventory data from the American Petroleum Institute (API), despite news that the US may have agreed to remove all Trump-era sanctions on Iran’s oil and shipping sectors as part of a possible nuclear agreement. Reuters reports that Iran has said that the US has also agreed to take some senior figures off of a blacklist. German Foreign Minister Mass cautions that a deal is still a long way away, and US National Security Adviser Sullivan stated on Sunday that there is a “fair distance to travel.” Market participants looked ahead to the US flash composite PMI and new home sales data, Canadian retail sales, and the weekly EIA inventory report for further direction.
The API reported a 7.20mb draw from US crude oil stockpiles for the week ended June 18, above expectations calling for a 5.12mb decrease (average of polls by Reuters and S&P Global Platts). Data for distillates and gasoline were neutral as API showed a 1.04mb build in distillate stocks, similar to forecasts at 0.99mb, and the industry group reported a 1.07mb rise in gasoline inventories, in line with expectations at 0.96mb. The more closely watched EIA report is due at 10:30am.
The flash June Markit Composite PMI for Japan came in at 47.8, falling from an upwardly-revised 48.8 last month. The Japanese flash Manufacturing PMI fell from an upwardly-revised 53.0 in May to 51.5 this month. The Nikkei edged down 0.03% overnight, while the Shanghai Composite closed 0.25% higher and the Hang Seng added 1.79%.
In European news, the flash June Composite PMI for the Eurozone came in at 59.2, above expectations at 58.8 and up from 56.9 last month. The flash Composite PMI for Germany was also a beat, at 60.4 (vs 57.5), while the index for France missed expectations by coming in at 57.1 (vs 59.0). As of this writing, the DAX was down 0.62% and the CAC 40 had lost 0.58%. The flash Composite PMI for the UK came in at 61.7, below the 62.8 Econoday consensus. Nonetheless, the FTSE 100 was trading 0.25% higher as of this writing. US stock market index futures were little changed this morning. The US dollar index was also trading flat.
Crude futures settled flat to lower yesterday, while products posted gains of over one percent, with crack spreads widening. Gains in global shares and weakness in the US dollar were supportive, while news that OPEC+ could be increasing its production from August likely weighed on yesterday’s price action. WTI crude fell 60 cents to settle at $73.06/bbl and Brent crude edged down 9 cents to close at $74.81/bbl. RBOB futures rose 2.74 cents, settling at $2.2243/g, and ULSD (HO) futures added 2.42 cents to $2.1510/g. According to Platts, the New York Harbor ULSHO barge differential to NYMEX weakened by 3.05 cents to -21.25c/g, while ULSD and HSHO barge differentials held steady at -0.20c/g and -31.75c/g, respectively. Also per Platts, June propane prices rose on Tuesday as Mt. Belvieu non-LST prices rose 50 points to 98.500c/g and LST prices added 62.5 points to 99.125c/g. Conway spot strengthened by 1.50 cents to 98.250c/g.
Natural gas futures rose 6.7 cents to settle at $3.258/mmBtu. The National Hurricane Center is tracking a disturbance located a few hundred miles east of the Windward Islands, but gives it a low 10% chance of cyclone formation over the next 48 hours.
