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NEWS
Crude oil and refined products futures were seeing small losses in the overnight session on Thursday, as market participants awaited the outcome of OPEC+ oil producer talks and data on the US service sector. Trade in global equities was mixed, but US dollar trade was supportive as the index was seeing fresh multi-year lows.
Reuters reports that OPEC+ sources say that OPEC and Russia have made progress towards a compromise on oil policy for next year. Currently, the group’s output ceiling is set to rise by 2mb/d in January. While Saudi Arabia appears to be pushing for a three-month extension of the current output ceiling, there has been pushback from Russia, Iraq, Nigeria, and the United Arab Emirates. In other news, S&P Global Platts says it will be seeking feedback on the possibility of including WTI crude oil in its dated Brent oil price assessment. Platts has been adding grades to its dated Brent price assessment over time as output from individual streams has fallen as fields mature.
Asian shares saw mixed but mostly higher trade overnight. The Caixin China Composite PMI strengthened from 55.7 to 57.5 last month, indicating the country’s economic expansion accelerated. Nevertheless, the Shanghai Composite slipped 0.2% lower. Other indexes strengthened, with the Asia Dow up 0.4%. The Nikkei edged up 0.03%, and the Hang Seng climbed 0.7% higher. Economic data from Europe this morning were generally positive, but shares were trading flat to lower. Retail sales growth of 1.5% in October for the Eurozone beat expectations at 0.7%, and the final Markit Eurozone Composite PMI for November came in at 45.3, above consensus at 45.1 (but still in contractionary territory). The index for Germany came in at 51.7, below expectations at 52.0, while the index for France beat the 39.9 forecast, coming in at 40.6. The contraction in the UK economy also slowed, with the final CIPS/Markit PMI at 49.0 (expectations were down at 47.4). While the FTSE 100 was up 0.1% this morning, the CAC 40 was down 0.3% and the DAX had lost 0.5%. US stock market indexes were just north of the unchanged mark as of this writing, ahead of the ISM Services Index for November – seen at 56.0, down slightly from 56.6 the previous month. The US dollar index was extending its slide, down 0.4% and at fresh lows not seen since the spring of 2018.
The complex strengthened by over one percent across the board on Wednesday, with strength in the FTSE 100 following approval of the Pfizer/BioNTech coronavirus vaccine by British regulator MHRA, and with some weakness in the US dollar index, despite a generally unsupportive weekly inventory report from the Energy Information Administration. Brent crude gained 83 cents, closing at $48.25/bbl, and WTI crude climbed 73 cents higher to settle at $45.28/bbl. RBOB futures settled at $1.2399/g, up 1.95 cents, and ULSD (HO) rose 1.89 cents for a $1.3662/g settlement price. In the New York Harbor cash market, ULSD and ULSHO barge price differentials to spot NYMEX weakened by 25 points each to -0.60c/g and -8.75c/g, respectively, according to Platts. HSHO differentials held steady at -15.30c/g. Spot propane prices strengthened along with crude. Mt. Belvieu LST prices climbed 1.375 cents higher to 58.125c/g, non-LST prices saw a 1.375-cent gain as well, hitting 58.625c/g, and Conway spots added 75 points to reach 54.750c/g.
Natural gas futures fell 10 cents to settle at $2.780/mmBtu yesterday, despite a slightly stronger two-week degree day forecast and a tighter forecasted market balance next week. The EIA is due to release its weekly natural gas storage report this morning, and analysts polled by Reuters expect to see a 12bcf withdrawal being report for the week ended November 27. This would be well below the 41bcf five-year average withdrawal, and also smaller than last year’s 22bcf drop.