The complex was seeing flat-to-higher trade this morning in the overnight session amid weakness in the US dollar and strength in equities, despite some bearish content in the monthly oil market report from the International Energy Agency (IEA).
In its latest monthly oil market report, IEA writes that tightening restrictions due to the resurgence of the coronavirus “will continue to constrain fuel demand until vaccines are more widely distributed, most likely only by the second half of the year.” With global oil demand falling in December, IEA cut its forecast for the first three months of this year by 580kb/d and its outlook for the year by 300kb/d.
In supportive economic news, official Chinese figures indicate the world’s second largest economy grew 2.3% last year – the only major economy to avoid a contraction. Fourth quarter GDP growth was reported at 6.5% year-on-year by the National Bureau of Statistics, beating the 6.1% consensus forecast. Still, the Shanghai Composite shed 0.8%, but the Hang Seng jumped 2.7% higher and the Nikkei strengthened 1.4%. European shares were seeing flat-to-higher trade this morning. The FTSE 100 and CAC 40 were just north of the unchanged mark, while the DAX was up 0.3% following encouraging German economic data. The CPI rose 0.5% in December, matching expectations, and the ZEW Survey’s current conditions index improved to a stronger-than-expected -66.4 (versus a -68.0 expectation). The economic sentiment index from ZEW also rose further than expected, to 61.8 (consensus was at 60.0). Future for the major US stock market indexes were seeing gains of between 0.7% (Dow and S&P 500 futures) and 0.8% (Nasdaq futures). Also supportive for oil, the US dollar index was down 0.3% as of this writing. Market participants had a quiet day on the economic calendar ahead of them.
The complex saw losses of over 1.5 percent across the board on Friday ahead of the holiday weekend, with weakness in stocks, strength in the US dollar, and a continued rise in the US oil rig count likely weighing. Brent crude fell $1.32, closing at $55.10/bbl, and WTI lost $1.21, settling at $52.36/bbl. RBOB futures settled 2.55 cents weaker at $1.5284/g and ULSD (HO) settled at $1.5929/g, down 2.65 cents. According to Platts, the New York Harbor ULSHO barge price differential to spot NYMEX HO weakened by 35 points to -9.85c/g on Friday, while the ULSD differential held steady at -0.30c/g and the HSHO differential was unchanged at -15.75c/g. Gulf Coast prices fell along with crude on Friday, but the north-south spread reversed. According to Platts, Mt. Belvieu non-LST prices dropped 2.250 cents lower to 92.500c/g and LST prices at the hub fell 2.000 cents to 95.000c/g. Meanwhile, Conway prices shot up 7.500 cents to 104.500c/g.
Natural gas futures on NYMEX strengthened 7.1 cents on Friday, settling at $2.737/mmBtu despite an uptick in the rig count and mixed shifts in the temperature outlook for the next two weeks. As of this morning, the latest ECMWF outlooks indicate mixed but mostly above-normal temperatures in the Midwest and on the East Coast, with above-normal temperatures in the Midwest in the 6-10 day forecast and below-normal temperatures for the Northeast (except for eastern Maine). The 11-15 day outlook is similarly supportive for the East Coast but less so for the Midwest.
