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NEWS
Petroleum futures looked set for a third session higher across the board today, with crack spreads widening as gains in crude were closer to one percent, while gains in refined products futures were about two percent as of this writing in the overnight session. Signs of Iraqi fiscal problems and strength in equities following news that the Trump administration is going to allow the Biden transition team to begin interacting with agency officials. Weakness in the US dollar was also supportive for crude prices.
Reuters reports that Iraq is seeking its first-ever crude oil prepayment agreement, given strained finances. An official at the oil ministry confirmed that a letter from SOMO is seeking bids from possible counterparties for prepaid oil cargos for five years (January 2021 through December 2025), as part of an urgent plan to boost the state budget given OPEC output cut obligations, foreign debts, and the need to keep their “economy standing.” In US supply-side news, the US Army Corps of Engineers has given Canada’s Enbridge Inc federal permits for a project to replace the aged Line 3 crude oil pipeline that runs from Alberta to the Midwest. Enbridge plans to replace the line, which is over 50 years old, and double its capacity to 760kb/d.
Last night, Reuters reported that two Trump administration officials said that Biden agency review teams may begin working with Trump agency officials as soon as this morning. The General Services Administration told Biden that he could formally begin the transition process. Asian shares mostly strengthened overnight, as the Hang Seng gained 0.4% and the Nikkei shot up 2.5%. The Shanghai Composite, however, slipped 0.3% lower. European shares were rising this morning, with solid gains of 0.9% in the DAX, 1.0% in the FTSE 100, and 1.2% in the CAC 40 amid generally favorable economic data. The German economy grew 8.5% quarter-on-quarter in Q3, beating consensus at 8.2% and recovering from a 9.7% contraction in Q2. The Ifo Survey’s Business Climate index for Germany came in at 90.7 this month, beating the 90.1 expectation, and the INSEE’s French Business Climate Indicator came in at 92 this month, above expectations at 91. Market participants looked ahead to data on the US housing market and consumer confidence for further direction.
The complex strengthened for a second session on Monday, with positive news on AstraZeneca’s coronavirus vaccine candidate and strength in US shares supporting along with geopolitical tensions in Libya and between Yemen and Saudi Arabia. Brent crude futures climbed $1.10 higher, closing at $46.06/bbl, and WTI futures gained 64 cents to settle at $43.06/bbl. RBOB futures settled 2.88 cents stronger at $1.2040/g, and ULSD (HO) settled at $1.3105/g for a 2.42-cent gain. New York Harbor ULSD barge differentials to NYMEX strengthened by 25 points to +0.10c/g yesterday, according to Platts, while HSHO and ULSHO differentials were steady at -15.00c/g and -7.90c/g, respectively. November propane prices strengthened along with crude. Mt. Belvieu LST prices, according to Platts, climbed 1.375 cents higher to 52.625c/g and non-LST prices shot up 2.250 cents to 53.250c/g. Conway price gains were slimmer at one cent, to 50.250c/g.
Natural gas futures gained 6.1 cents yesterday, settling at $2.711/mmBtu with a relatively sharp upward revision to the two-week heating degree day outlook (GFS) and a tighter market balance expectation for this week from Refinitiv. As of this morning, the latest near-term outlooks based on the European model call for above-normal temperatures across the eastern two-thirds of the country in the 1-5 day period, and above-normal temperatures in the Northeast and near the Great Lakes in the 6-10 day period, but with some below-normal temperatures in the Mid-Atlantic and central part of the country.