Petroleum futures were trading just south of the unchanged mark as of this writing in the overnight session on Thursday, with an uptick in the US dollar index and weakness in global shares with US-China tensions likely weighing. Market participants looked ahead to US international trade, weekly jobless claims, new homes sales, and Gross Domestic Product (GDP) data for further direction.
Japanese retail sales contracted 0.3% last month, and while this beat a 0.4% expected drop, November sales growth was revised down by 0.1 percentage points to 0.6%. The Nikkei fell 1.5%, but losses were larger in the Shanghai Composite (1.9%) and Hang Seng (2.6%). Reuters reports that China has threatened that Taiwanese “independence means war,” and conducted military activities in the Taiwan Strait last weekend, while Taiwan President Tsai Ing-wen has stated the Republic of China (the formal name for Taiwan) is already an independent country. The new US administration has stated its commitment to Taiwan is “rock solid,” and in separate news US Secretary of State Blinken stated yesterday that the US rejects China’s maritime claims in the South China Sea beyond those permitted under international law, pledging to “stand with Southeast Asian claimants in the face of PRC pressure.”
Economic data from Europe so far this morning were encouraging, as the European Commission’s economic sentiment index for the Eurozone came in at 91.5 this month, beating consensus at 89.5 and up from the previous reading of 90.4 (now upwardly revised to 92.4). The DAX was down 0.6% this morning, however, and the FTSE 100 had lost 1.0%. The CAC 40 was faring better, down 0.1%. As for US shares, Dow futures were up 0.1% but S&P 500 futures were down 0.1% and Nasdaq futures had lost 0.7%.
The complex settled in mixed fashion near the unchanged mark, with Brent slipping 10 cents lower to $55.81/bbl while WTI added 24 cents, settling at $52.85/bbl. Weekly EIA US crude stock data were bullish, whereas a stronger dollar and weaker global shares were bearish. RBOB futures edged down 36 points to settle at $1.5771/g, while ULSD (HO) settled 1.05 cents stronger at $1.6089/g. According to Platts, the New York Harbor ULSD barge price differential weakened by 5 points to -0.05c/g, and the HSHO differential dropped 2.25 cents lower to -18.00c/g, while the ULSHO differential held steady at -11.50c/g yesterday. Spot Gulf Coast propane prices strengthened yesterday, according to Platts, despite unsupportive weekly EIA propane/propylene inventory data. Mt. Belvieu non-LST prices jumped 3.75 cents higher to 92.000c/g, and LST prices at the hub shot up 3.00 cents higher to 91.250c/g. The north-south spread narrowed, however, as Conway prices fell 50 points to 81.250c/g despite a fairly large draw in the weekly EIA report.
Natural gas futures strengthened 10.4 cents on Thursday, settling at $2.760/mmBtu with a stronger two-week heating degree day outlook (GFS) and a tighter US market balance expectation for next week (Refinitiv). As of this morning, the Midwest is expected to see near to above-normal temperatures over the next 5 days (ECMWF), but much of the East Coast is expected to see below-normal temperatures, with particularly large deviations below-normal in the Northeast, save for eastern Maine. The EIA is due to release its weekly natural gas storage report this morning. Analysts polled by Reuters expect the agency to report at 136bcf withdrawal for the week ended January 22, well below last year’s 170bcf withdrawal and the 174bcf five-year average.
