Petroleum futures were seeing further losses in the overnight session on Thursday amid losses in US stock market index futures and in European equities, despite weakness in the US dollar and bullish US crude oil inventory data from the American Petroleum Institute (API). Market participants looked ahead to US labor market and the weekly inventory report by the EIA for further direction.
The API reported a 7.98mb draw from US crude oil stockpiles for the week ended July 2, well above expectations calling for a 5.10mb decrease (average of polls by Reuters and S&P Global Platts). Data for distillates were neutral to unsupportive as API showed a 1.09mb build in distillate stocks, slightly above forecasts at 0.80mb, while gasoline data were supportive as the industry group reported a 2.74mb draw from gasoline inventories, whereas forecasts called for a smaller decrease of 1.95mb. The more closely watched EIA report is due at 11:00am.
Asian stock markets closed in the red overnight with the Shanghai Composite falling 0.8%, the Nikkei losing 0.9%, and the Hang Seng dropping 2.9% lower. In European news, the German merchandise trade surplus narrowed in May from E15.6bn to E12.6bn, missing the Econoday consensus at E15.9bn. As of this writing, the DAX was down 2.2%, the CAC 40 had lost 2.6%, and the FTSE 100 had dropped 2.1%. US stock market index futures were also seeing losses this morning around 1.6%. In supportive news, the US dollar index was down 0.2%.
The complex posted across-the-board losses on Wednesday amid a somewhat unsupportive Short-Term Energy Outlook by the EIA, despite gains in global equities. Brent crude fell $1.10 to $73.43/bbl and WTI settled $1.17 lower at $72.20/bbl. RBOB futures lost 2.22 cents to $2.2060/g, and ULSD (HO) settled at $2.0891/g, down 1.58 cents. Biodiesel (D4) RIN prices remained steady at 162 cents yesterday. The New York Harbor barge ULSHO differential to NYMEX strengthened by 1.5 cents to -17.50c/g, according to Platts. ULSD and HSHO differentials held steady at -0.30c/g and -31.75c/g, respectively. Per Platts, propane prices fell along with crude yesterday. Mt. Belvieu LST prices dropped 4.250 cents to 107.250c/g, non-LST prices lost 4.000 cents to 108.000c/g, and Conway prices weakened 2.625 cents to 106.000c/g.
NYMEX natural gas futures settled 4.1 cents lower at $3.596/mmBtu yesterday amid a looser US market balance forecast for next week and a weaker two-week cooling degree day forecast. The EIA is also due to report on US natural gas storage levels for the week ended July 2 this morning, and a Reuters poll calls for a 34bcf injection, smaller than both last year’s 57bcf and the five-year average at 63bcf. Tropical Storm Elsa is currently located across the Carolinas and is still seen moving northeast. The NHC is also tracking a disturbance located over southern Texas, but it gives it a 0% chance of cyclone formation over the next 48 hours.
