Crude oil and refined product futures were seeing small losses in the overnight session on Monday amid weakness in European and Asian shares and some slight strength in the US dollar, despite mixed and mostly higher trade in futures for the major US stock market indexes and supportive geopolitical news. Market participants had a quiet day on the economic calendar before them.
Today’s losses came despite supportive news from Africa and the Middle East. Reuters reports that the Niger Delta Avengers, a militant group whose actions cut Nigerian oil production by about 50% in 2016, have threatened to resume attacks. The Nigerian government is debating a bill that would send 2.5% of oil revenues to communities hosting oil and gas installations, whereas Reuters reports that communities are asking for 10%. In other news, the US says it has carried out a new round of air strikes against Iran-backed militia in Syria and Iraq in response to drone attacks against US facilities in Iraq. These tensions may have an impact on indirect US-Iranian nuclear talks.
Asian shares edged down last night, with Tokyo shedding 0.06% and Shanghai shares closing 0.03% weaker. The Hong Kong exchange was closed. European shares were mixed but mostly lower as of this writing. The FTSE 100 was down 0.28% and so was the CAC 40, whereas Germany’s DAX was up 0.13%. Futures for the major US indexes were mixed, with Nasdaq futures up 0.3% but S&P 500 futures flat, and Dow futures down 0.1%.
Crack spreads narrowed on Friday as crude futures strengthened while refined products futures weakened. The Supreme Court ruled in favor of refiners in a case involving renewable volume obligation waivers for HollyFrontier and CVR Energy from 2017 and 2018. Meanwhile, the US dollar weakened and US shares strengthened, supportive for crude futures. Brent crude closed 62 cents stronger at $76.18/bbl and WTI gained 75 cents, settling at $74.05/bbl. RBOB futures fell 1.70 cents to settle at $2.2639/g and ULSD (HO) settled 1.30 cents weaker at $2.1493/g. Biodiesel (D4) RIN prices fell from 175 cents on Thursday to 160 cents on Friday, consistent with the news on refinery waivers, and the New York Harbor ULSHO barge price differential to NYMEX strengthened by two cents to -17.50c/g. The HSHO and ULSD barge price differentials held steady at -31.75c/g and +0.10c/g, respectively. Also according to Platts, June propane prices strengthened yesterday. Mt. Belvieu LST prices gained 87.5 points, hitting 104.00c/g, non-LST prices jumped 1.375 cents higher to 104.25c/g, and Conway prices climbed one cent higher to 103.50c/g.
NYMEX natural gas futures strengthened 7.8 cents, settling at $3.496/mmBtu on Friday with a stronger cooling degree forecast and a tightening picture of the US market balance this week. As of this morning, the National Hurricane Center is tracking two disturbances in the Atlantic. A disturbance out in the open ocean is given a low chance of 20 percent for tropical cyclone formation as it moves west/west-northwest. However, a disturbance about 200 miles southeast of Hilton Head, South Carolina, is given a strong chance of 70 percent for tropical cyclone formation over the same period. The low pressure system is seen moving west-northwest towards the South Carolina or Georgia coasts by this evening.
