Crude oil and refined products futures were extending their rally as of the overnight session on Tuesday, seeing gains of over two percent amid further strength in global shares following encouraging Eurozone economic data, and with discussions on another US stimulus package to begin, despite further strength in the US dollar.
The Nikkei rose 1.0%, the Shanghai Composite added 0.8%, and the Hang Seng climbed 1.2% higher overnight. In economic news this morning, Italian GDP contracted 6.6% year-on-year in the fourth quarter of 2020, beating the 6.9% consensus decline. Also encouraging, consumer price inflation in France was positive last month, with the CPI up 0.2% - against expectations for a 0.3% decline in the price level. It was not all positive news, as the Nationwide House Price Index in the UK fell to -0.3 unexpectedly, short of consensus at 0.2. Today’s headline, however, was a beat. Flash Eurozone GDP for the fourth quarter showed a 0.7% contraction, far shallower than the 1.7% expected drop, although third quarter growth was revised down slightly from 12.6% to 12.4%. As of this writing, the DAX was up 1.2% and the CAC 40 had rallied 1.7%, but the FTSE 100 was trailing with a 0.4% rise.
In US news, Reuters reports that the GOP released a $618bn stimulus plan yesterday. Later in the day, Democrats filed a joint $1.9tn budget measure. Negotiations between the President and Republican senators are expected today. As of this writing, Dow, S&P 500, and Nasdaq futures were all up about 0.8%. Meanwhile, the US dollar index was up 0.1% and near its strongest levels since December 7, which is unsupportive for crude. Market participants had a quiet day on the economic calendar before them.
The complex rallied to gains of over two percent on Monday amid strength in global shares with mostly encouraging economic data releases out of Europe and the US, and with a bullish note on Brent pricing from Goldman Sachs. Brent crude climbed $1.31 higher to $56.35/bbl and WTI crude settled $1.35 stronger at $53.55/bbl. RBOB futures strengthen 3.74 cents, settling at $1.5901/g, while ULSD (HO) saw a larger jump of 4.85 cents to $1.6469/g, perhaps with support from a storm in the Northeast. According to Platts, the differentials between cash ULSD and HSHO barge prices at New York Harbor held steady yesterday at -0.10c/g and -17.50c/g, respectively, but the ULSHO differential weakened 95 points to -12.25c/g. As for propane, Platts reports a 4.875-cent drop in Mt. Belvieu non-LST prices to 85.250c/g yesterday. LST prices at the hub were steady at 87.000c/g, while Conway spot prices shed 25 points to hit 87.750c/g. Per Platts, the front switch backwardation narrowed sharply for non-LST barrels, from 11.75-cents to just 75 points, with a source suggesting that strong Enterprise exports are holding up March non-LST prices, whereas the backwardation is steeper for Lone Star Terminal, at 4 cents.
Natural gas futures on NYMEX jumped 11.2% higher to settle at $2.850/mmBtu on Monday, with a stronger degree day forecast and tightening current-week market balance view. The latest 1-5 day ECMWF outlook calls for mixed, near-normal temperatures in the Midwest and below-normal temperatures for much of the East Coast – but the Northeast is expected to see near to above-normal temperatures. The 6-10 day forecast is supportive, with below-normal temperatures seen across the country, and with double-digit deviations (in degrees Fahrenheit) below normal temperatures across a large swathe of the central part of the country.
