Petroleum futures were seeing mixed trade near the unchanged mark with weekly API crude stock data likely supporting, whereas weakness in global shares and strength in the dollar were unsupportive. Market participants looked ahead to the weekly EIA inventory report, US durable goods orders for December, and to the FOMC monetary policy announcement for further direction.
The average of polls conducted by Reuters and S&P Global Platts called for a 0.6mb draw from US crude stocks for the week ended January 22, whereas API reported a sharper drop of 5.3mb. Cushing, OK stock levels were reported down 3.5mb, account much of the national draw. Whereas these data were bullish, products data were unsupportive. API reported a larger than expected build of 3.1mb (1.5mb expected) in gasoline, and a surprise 1.4mb build in distillates (against a predicted 0.6mb dip). The more closely watched EIA report is due this morning at 10:30. In other news this morning, Reuters reports that a U.S. appeals court upheld a lower court’s decision to throw out a federal permit and order an environmental review for the Dakota Access crude oil pipeline. The line is to remain open for now.
Trade in global shares was likely weighing on the price action this morning. While the Shanghai Composite added 0.1% and the Nikkei rose 0.3%, the Hang Seng fell 0.3% and the Asia Dow lost 0.4%. Losses in European shares were wider, with the FTSE 100 down 1.1%, the CAC 40 having lost 1.3%, and the DAX dropping 1.8% lower as of this writing. The heavy losses in Germany followed a weaker than expected GfK consumer climate index, coming in at -15.6 compared to consensus at -7.8 and down from -7.5 previously (downwardly revised). Futures for the major US stock market indexes were seeing losses of between 0.6% (Nasdaq f) and 1.0% (S&P 500 f), and the US dollar index was up 0.3% - also unsupportive for crude. The FOMC is due to make its policy announcement at 2 this afternoon, and while no changes to the Federal Funds Target rate are expected, market participants will be looking for guidance on QE in the press conference.
Crude oil and refined products futures settled mixed but mostly higher on Tuesday, with strength in equities and a weaker dollar supporting along with Middle East tensions. Brent crude added 3 cents, closing at $55.91/bbl, while WTI shed 16 cents to settle at $52.61/bbl. RBOB futures climbed 1.96 cents higher to $1.5807/g, while ULSD (HO) settled up just 45 points at $1.5984/g. New York Harbor ULSD barge prices strengthened by 15 points against NYMEX to trade flat to front-month futures, whereas ULSHO barge price differential weakened by 50 points to -11.50c/g, according to Platts. Propane prices were mixed yesterday, with Platts reporting an 87.5-point rise in non-LST prices at Mt. Belvieu to 88.000c/g, but a 25-point dip in LST prices to 88.250c/g and a one-cent drop in Conway prices to 81.750c/g.
Natural gas futures on NYMEX rose 5.4 cents yesterday, settling at $2.656/mmBtu with a stronger two-week heating degree day forecast and tighter US market balance expectation for next week. As of this morning, the latest 1-5 day ECMWF outlook calls for below-normal temperatures in both the Midwest and Northeast, but the 6-10 day outlook has moderated, now calling for near to above-normal temperatures in both regions.
