Petroleum futures were seeing further gains in the overnight session on Wednesday despite losses in US stock market index futures and strength in the US dollar, as well as unsupportive US crude oil inventory data from the American Petroleum Institute (API). Market participants looked ahead to US durable goods orders data and the weekly inventory report from the Energy Information Administration (EIA) for further direction.
The API reported a 1.60mb draw from US crude oil stockpiles for the week ended August 20, below the 2.94mb expected decline (average of polls by Reuters and S&P Global Platts). Data for distillates were neutral as API showed a 0.25mb decline in distillate stocks, in line with forecasts at 0.34mb, while gasoline data were unsupportive as the industry group reported a 1.00mb decline in gasoline inventories, while forecasts called for a slightly larger draw of 1.53mb. The more closely watched EIA report is due at 10:30am. In the news, Reuters reports that the Biden administration said yesterday that it would take steps to restart the federal oil and gas leasing program next week, after it was paused in January for an analysis of its impact on the environment and value to taxpayers. The US Interior Department is still conducting that review.
Asian stock markets closed mixed overnight with the Shanghai Composite adding 0.74%, whereas the Nikkei closed just 0.03% lower and the Hang Seng edged down 0.13%. In European news, the Ifo Survey for August in Germany showed a deterioration in the business climate indicator, falling from 100.7 to 99.4 – below consensus at 100.4. The current conditions component beat expectations by coming in at 101.4 (vs 100.8), while the business expectations component missed forecasts with a 97.5 figure (vs 100.0). The DAX was down 0.2% this morning, while the CAC 40 and the FTSE 100 had both edged up 0.1%. As of this writing, US stock market index futures were trading flat to lower with Dow futures steady, while futures for the S&P 500 and the Nasdaq were both down 0.1%. Also unsupportive for crude prices, the US dollar index was up 0.2%.
The complex rallied for a second consecutive session yesterday amid gains in global equities. WTI crude added $1.90 to settle at $67.54/bbl and Brent crude jumped $2.30 higher to close at $71.05/bbl. RBOB futures rose 5.76 cents, settling at $2.1808/g and ULSD (HO) futures settled 6.17 cents stronger at $2.0668/g. According to Platts, New York Harbor ULSD and ULSHO barge differentials to NYMEX weakened by 5 points and 10 points to -0.15c/g and -16.50c/g, respectively, while the HSHO differential held steady at -30.25c/g. Biodiesel (D4) RIN prices rose from 150 cents on Monday to 157 cents on Tuesday. Per Platts, August propane prices strengthened along with crude on Tuesday as Mt. Belvieu LST prices rose 1.750 cents to 111.750c/g and non-LST prices added 1.625 cents to 111.375c/g. Conway spot prices strengthened by 62.5 points to 113.750c/g.
Natural gas futures fell 4.9 cents to settle at $3.896/mmBtu yesterday. The National Hurricane Center continues to track three disturbances in the Atlantic, one located over the central Caribbean Sea (30% chance of cyclone formation), the second one located about 1,000 miles northeast of the northern Leeward Islands (also 30% chance of cyclone formation), and the third one is currently several hundred miles southwest of the Cabo Verde Islands (20% chance).
