Crude oil and refined products futures were trading mostly lower as of this writing in the overnight session on Thursday, amid a continued rally in the dollar. Stock markets were mixed following a large European economic data set. Participants looked ahead to US jobless claims and GDP data for further direction.
Asian shares settled mixed overnight. The Nikkei lost 0.31% and the Hang Seng fell 0.36%, but shares in Shanghai jumped 0.90% higher despite continued problems with electricity provision. Reuters reports that the supply deficit has forced some smaller firms to hire diesel generators or shut down. European shares were mixed, but mostly lower this morning following a large data set. The FTSE 100 was up 0.21%. The final estimate of second quarter GDP growth in the UK saw a surprise upward revision from 4.8% to 5.5%. On the other hand, the Nationwide House Price Index for the UK fell from to 0.1 from 2.0, below consensus at 0.6. The CAC 40 was down 0.12% and the DAX had lost 0.37% as of this writing. Consumption of manufactured goods in France grew 1.1% in August, well above the 0.1% forecast, but the CPI showed a 0.2% fall in the price level, against expectations for a shallower 0.1% dip. Similarly, consumer price inflation in Germany appears to have stalled this month, against expectations for a 0.1% rise. On the other hand, the CPI in Italy slipped 0.1% lower, shallower than the 0.3% consensus forecast. In labor market news, both the German unemployment rate of 5.5% for September and the Eurozone unemployment rate of 7.5% for August matched expectations. Market participants looked ahead to weekly US initial jobless claims, expected at 335,000, and to the final estimate of second quarter GDP growth (an upward revision of 0.1pp to 6.7% is expected) for further direction.
Crack spreads widened as crude futures fell and refined products futures strengthened on Wednesday. Weekly EIA data were bearish for crude oil, WTI fell 46 cents to settle at $74.83/bbl, and Brent lost 45 cents to close at $78.64/bbl. EIA reported a small, surprise build in distillates – but a 0.73mb East Coast draw, and gasoline inventories rose by slightly less than expected during the reporting week ended last Friday. RBOB futures strengthened 2.74 cents, settling at $2.2293/g, and ULSD (HO) settled 1.85 cents stronger at $2.3075/g. In the New York Harbor cash market, the ULSD barge price differential to spot NYMEX strengthened by 5 points to +0.05c/g according to Platts, while the HSHO and ULSHO barge price differentials held steady at -21.00c/g and -11.35c/g, respectively. Biodiesel (D4) RIN prices strengthened for a second day, up by 5 cents to 135 cents. Propane prices fell back following a larger than predicted stock build in the EIA report. Mt. Belvieu non-LST prices fell 2.125 cents to 141.375c/g and LST prices lost 1.25 cents, hitting 142.125c/g according to Platts. Conway prices slipped 1.125 cents lower to 141.250c/g.
Natural gas futures dropped 6.9% lower yesterday, ending a four-session rally. Futures fell 40.3 cents to settle at $5.477/mmBtu. The EIA is due to release it weekly natural gas storage report this morning, and analysts surveyed by Reuters see a larger-than-normal storage injection of 87bcf being reported. The five-year average for the week sits at 72bcf, and we saw a 74bcf injection last year. Out in the Atlantic, Hurricane Sam is still expected to pose no threat to the US mainland, per the latest from the National Hurricane Center. Tropical Storm Victor has formed southwest of the Cabo Verde Islands, but is not expected to pose any threat to land through Tuesday. The Center is tracking another disturbance in the Atlantic, but gives it a near-zero chance for tropical cyclone formation over the next two days.
