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Petroleum futures were strengthening in the overnight session on Wednesday amid news that Pfizer’s COVID-19 vaccine is more effective than previously reported, gains in European and US equities, and weakness in the US dollar, despite bearish US crude oil inventory data from the American Petroleum Institute (API). Market participants looked ahead to US housing starts data and the Canadian CPI, as well as the weekly EIA inventory report for further direction.
The API reported a 4.20mb build in US crude oil stockpiles for the week ended November 13, while expectations called for a smaller build of 0.88mb (average of polls by Reuters and S&P Global Platts). Data for distillates were bullish as API showed a 5.00mb drop in distillate stocks, while forecasts called for smaller decline of 1.63mb, and figures were neutral for gasoline as the industry group reported a build of 0.26mb in gasoline inventories, in line with expectations calling for a 0.19mb increase. Cushing, OK crude oil inventories rose by 1.60mb last week, per API. The more closely watched EIA report is due at 10:30am. In the news this morning, Pfizer said that final results from the late-stage trial of its vaccine showed it was 95% effective, compared to last week when the company put the efficacy rate at more than 90%.
The Japanese merchandise trade balance was in a surplus of Y872.9bn last month, well above expectations calling for a surplus of Y250.0bn. Despite supportive economic data from Japan, the Nikkei fell 1.1%, while the Shanghai Composite rose 0.2% and the Hang Seng added 0.5%. In economic news across the pond, the Harmonized Index of Consumer Prices (HICP) for the Eurozone rose 0.2% last month, as expected. The UK’s Consumer Price Index (CPI) saw no change last month, while forecasts called for a 0.1% dip. The Producer Price Index (PPI) in the UK for the same month showed no changed in output prices (expectations called for a 0.1% increase), while input prices rose 0.2% (forecasts called for a 0.1% drop). European shares were trading in the black this morning with the DAX and the FTSE 100 both up 0.4%, and the CAC 40 having gained 0.6%. US stock market index futures were seeing gains of between 0.2% (Nasdaq f) and 0.5% (Dow f), as of this writing. Also supportive for crude oil prices, the US dollar index was down 0.1%.
Petroleum futures settled mixed but mostly higher yesterday with losses in US shares likely weighing, while weakness in the US dollar and news of the possibility of tighter OPEC+ supply policies were supportive. WTI crude settled 9 cents higher at $41.43/bbl, while Brent crude edged down 7 cents to close at $43.75/bbl. RBOB futures gained 64 points and settled at $1.1532/g and ULSD (HO) added 1.02 cents to $1.2391/g. According to Platts, New York Harbor ULSD barge differentials to NYMEX weakened by 10 points to -0.75c/g, while ULSHO barge differential strengthened by 40 points to -8.35c/g. The HSHO barge differential held steady at -15.00c/g. November propane prices tumbled yesterday, per Platts, as Mt. Belvieu LST prices dropped 1.375 cents to 54.000c/g and non-LST prices fell by 1.500 cents to 54.500c/g. Conway spot prices weakened by 1.125 cents, averaging at 52.875c/g.
NYMEX natural gas futures edged down 50 points to settle at $2.692/mmBtu on Tuesday despite a stronger two-week heating degree day forecast and a tighter market balance expectation for next week. The latest 1-5 day forecast (EC) calls for above-normal temperatures in the Midwest, but near to below-normal temperatures in the Northeast. The 6-10 and 11-15 day outlooks are also unsupportive with above-normal temperatures expected in the Midwest and near to above-normal temperatures seen on the East Coast.