The information provided in this market update is general market commentary provided solely for educational and informational purposes. The information was obtained from sources believed to be reliable, but we do not guarantee its accuracy. No statement within the update should be construed as a recommendation, solicitation or offer to buy or sell any futures or options on futures or to otherwise provide investment advice. Any use of the information provided in this update is at your own risk.
Crude futures were seeing losses of under one percent in the overnight session on Thursday amid rising Libyan oil production, weakness in European shares and in US stock market index futures, and with the US dollar index looking set to snap a five-session losing streak. Coronavirus data were also likely adding to the gloom. Market participants looked ahead to US economic data in the form of weekly initial jobless claims, the Philadelphia Fed index, and existing home sales for further direction.
Libya’s National Oil Corporation, Reuters reports, says the country’s oil production has recovered to 1.25mb/d. The head of the NOC held a virtual meeting with Total’s head of exploration and production in the Middle East and North Africa, discussing the possibility of expanding investments in Libya and increasing production capacity and rates.
Asian shares mostly weakened overnight, with the Nikkei down 0.4% and the Hang Seng falling 0.7%, although the Shanghai Composite strengthened 0.5%. According to Reuters, Tokyo hit its highest coronavirus alert level, with a record-high 534 daily infections. Shares in Europe were falling across the board as of this writing, with the FTSE 100 in the UK down by 0.8%, Germany’s DAX down 0.9%, and the CAC in France having lost 0.7%. Reuters reports that the US coronavirus death toll has topped 250,000 with 1,400 deaths in 24 hours, and that the New York City public school system has stopped in-person classes due to rising local case counts. Futures for the Nasdaq were down 0.3%, Dow futures were off 0.2%, and S&P 500 futures were 0.1% weaker this morning. Also unsupportive for crude oil, the US dollar index was up by 0.2% after a five-session sell-off. Market participants looked ahead to weekly US initial jobless claims, expected to rise slightly to 710,000 in the week ended November 14, the Philadelphia Fed Manufacturing Index for this month (with consensus calling for a drop to 24.5), and to existing home sales data for October (seen showing a slowdown to a 6.470m annualized pace).
The complex strengthened across the board yesterday following encouraging data on the efficacy rate of Pfizer’s coronavirus vaccine candidate. Brent crude futures climbed 59 cents higher, settling at $44.34/bbl, and WTI crude futures rose 39 cents to close at $41.82/bbl. Weekly EIA stock data were neutral for crude oil, but bearish for gasoline and bullish for distillates. Consistent with this data, the gasoline crack weakened with RBOB futures adding just 97 points (settling at $1.1629/g), whereas the ULSD crack widened as futures jumped 2.49 cents higher to settle at $1.2640/g. New York Harbor ULSD barge differentials strengthened by 10 points against spot NYMEX to -0.65c/g, according to Platts, while HSHO and ULSHO differentials were steady at -15.00c/g and -8.35c/g, respectively. Propane prices fell yesterday, despite a larger than predicted draw from combined propane and propylene stockpiles in the weekly EIA report. Mt. Belvieu LST prices fell by 1.125 cents to 52.875c/g, non-LST prices dropped 1.500 cents lower to 53.000c/g, and Conway propane prices fell by 1.250 cents to 51.625c/g. The Midwestern stock deficit to the five-year average is now under one percent.
Natural gas futures on NYMEX added two cents yesterday, settling at $2.712/mmBtu, with a tighter market balance seen next week and a stronger two-week heating degree day forecast. The latest 1-5, 6-10, and 11-15 day outlooks from the European model call for above-normal temperatures in both the Northeastern and Midwestern consuming regions. The EIA is due to release its weekly natural gas storage report this morning, expected to show a 15bcf injection for the week ended November 13. This would be in contrast to a 24bcf five-year average withdrawal, and a 66bcf drop during the same week last year.
Product Price vs. NYMEX HO
NYH ULSD 1.2575 (0.0065)
NYH ULSHO 1.1805 (0.0835)
NY Harbor #2 1.1140 (0.1500)