Crude oil and refined products prices were strengthening as of this writing in the overnight session on Monday, amid a bullish note from Goldman Sachs and strength in global shares, despite strength in the US dollar and signs of rising Russian and Iraqi crude oil on the market.
Goldman Sachs in a note yesterday said that Brent crude oil prices could rise to $65/bbl by July, seeing a deficit of 0.9mb/d in the market during the first half of this year, following a 2.3mb/d deficit in the fourth quarter of last year, with OPEC+ curbs contributing. On the other hand, the bank also said it is “moderating the demand rebound to account for a slower start of vaccination and a cautious pace of reopening, leading in particular to a slower recovery in jet demand.” Demand growth of 5.3mb/d is expected in the six months through July, down from a previous forecast of 6.8mb/d. In unsupportive supply-side news, Reuters reports that sources familiar with the data say Russian oil and gas condensate production increased by 120kb/d to 10.16mb/d last month, up from 10.04mb/d in December. The increase is in-line with expectations, as Russia said it would raise output last month. Also unsupportive, Iraq says oil exports rose from 2.846mb/d in December to 2.868mb/d in January.
In economic news, PMI data indicate the Chinese manufacturing sector continued to grow last month. The NBS PMI came in at 51.3, although this was below the Reuters poll forecast of 51.6. The Caixin Manufacturing PMI was similar at 51.5, and also a miss as expectations were up at 52.7. The Japanese manufacturing sector, per the Jibun Bank PMI, was just short of breakeven last month, at 49.8. Asian shares strengthened, however, with the Nikkei up 1.6%, the Shanghai Composite rising 0.6%, and the Hang Seng climbing 2.2% higher. Growth in the Indian manufacturing sector picked up last month, with the Markit/Nikkei PMI up from 56.4 to 57.7. European shares were rising this morning following largely encouraging economic data releases. While a 9.6% drop in German retail sales in December was worse than expected, the German manufacturing sector grew faster than expected last month per the Markit PMI at 57.1, and so did French manufacturing (51.6). The final Eurozone manufacturing PMI for last month was also a slight beat, at 54.8 (consensus at 54.7). The Eurozone unemployment rate held steady at 8.3% in December, as expected. Finally, the CIPS/Markit manufacturing PMI for the UK came in at 54.1, beating consensus at 52.9. As of this writing, the FTSE 100 was up 1.3%, the CAC 40 had added 1.4%, and the DAX was trading 1.5% stronger. Market participants looked ahead to US manufacturing PMI and construction spending data for further direction. US stock market index futures were rising.
The complex settled mostly lower on Friday amid weakness in equities. Brent rose 35 cents to $55.88/bbl, but WTI shed 14 cents to settle at $52.20/bbl. RBOB settled 1.04 cents weaker at $1.5725/g, and ULSD (HO) edged down 13 points to settle at $1.6004/g. Per Platts, New York Harbor ULSD barge price differentials fell by 5 points to -0.10c/g, while the ULSHO differential strengthened by 20 points to –1.30c/g. HSHO barges were steady at 17.50c/g under futures. Spot propane prices were mixed featuring a narrowing of the north-south spread, as Mt. Belvieu LST prices fell 4.375 cents to 87.000c/g and non-LST prices lost 2.875 cents to hit 90.125c/g, according to Platts, while Conway spot prices jumped 3.75 cents higher to 88.000c/g.
Natural gas futures fell 10 cents, settling at $2.564/mmBtu with a looser market balance expectation for this week and a weaker two-week degree day forecast. The latest 1-5 day ECWMF outlook calls for mostly above-normal temperatures in the Midwest and the Northeast. The 6-10 day outlook is supportive, seeing well-below-normal temperatures in the Midwest and parts of the East Coast.
