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NEWS
Crude oil and refined products futures were seeing gains of over one percent across the board in the overnight session on Thursday amid strength in European shares following encouraging economic data releases, despite flat to lower trade in US equity index futures and continued (but modest) appreciation in the US dollar. Market participants awaited the European Central Bank monetary policy decision and US data on consumer price inflation and jobless claims for further direction.
Asian shares saw flat-to-lower trade overnight, with the Shanghai Composite edging up 0.04%, but the Hang Seng falling 0.35% and the Nikkei losing 0.23%. In economic news this morning, industrial production in the UK grew 1.3% in the month of October, well above consensus at 0.3%, and GDP for the UK grew 0.4% the same month, matching expectations. As of this writing, the FTSE 100 was trading 0.76% higher. French industrial production growth for October came in at 1.6%, also handily beating forecasts at 0.4%. The CAC was trading 0.27% higher this morning. The DAX, however, was flat. The ECB was set to make its monetary policy announcement at 7:45am. The bank was expected to keep rates steady – although Econoday notes some had outside prediction for a move into negative territory – but there were expectations that Quantitative Easing asset purchases would be increased by E500bn.
In North American news, Canada became the third country to green-light the Pfizer/BioNTech coronavirus vaccine yesterday. US stock market index futures were trading flat to lower as of this writing, with Dow futures up 0.01% but S&P 500 futures down 0.11% and Nasdaq futures down 0.39%. The US dollar index was up 0.04%, continuing its uptrend off from multi-year lows for a fifth session. Market participants looked ahead to the Consumer Price Index (CPI) for November, expected to show a 0.1% monthly rise in the price level, and to weekly initial jobless claims (seen rising to 724,000) for further direction.
The complex settled mixed and mostly little changed yesterday, with Brent crude closing just 2 cents higher at $48.86/bbl and WTI shedding just 8 cents to settle at $45.52/bbl. Weekly EIA crude oil, distillate, and gasoline data were bearish, whereas an attack on two oilfields in northern Iraq and strength in European shares were supportive. RBOB futures jumped 2 cents higher, settling at $1.2759/g, while ULSD (HO) fell 78 points to settle at $1.3989/g. In the New York Harbor barge cash market, the ULSHO price differential to spot NYMEX weakened by 90 points to -8.40c/g according to Platts. ULSD and HSHO differentials held steady at -0.30c/g and -15.30c/g, respectively. Spot propane prices saw mixed trade. Although EIA inventories were bullish overall, they were supportive for the Gulf Coast and relatively unsupportive for the Midwest. Mt. Belvieu LST prices climbed 62.5 points higher to 58.750c/g, according to Platts, while non-LST prices held steady at 59.500c/g. Conway prices fell back 50 points to 54.750c/g, widening the price spread between the two locations in a manner consistent with the stock data.
Natural gas futures strengthened 4.3 cents to settle at $2.442/mmBtu yesterday with a tighter market balance expectation for next week and some supportive developments in the 6-10 day temperature outlook. The latest 1-5 day outlook from the ECMWF calls for above-normal temperatures across most of the country, but while the 6-10 day forecast sees above-normal temperatures in the Midwest, below-normal temperatures are now the expectation for the East Coast. The 11-15 day outlook calls for above-normal temperatures for most of the continental US. The EIA is due to release its natural gas storage report for the week ended December 4 this morning at 10:30, expected to show an 83bcf withdrawal that would exceed both the 57bcf drop seen last year at this time and the 61bcf five-year average for the reporting week.