Petroleum futures were strengthening in the overnight session on Wednesday, most for a third consecutive session, following bullish US crude oil and supportive products inventory data from the American Petroleum Institute (API) and further strength in global shares with encouraging economic data releases out of Europe. Market participants looked ahead to the weekly inventory report from the Energy Information Administration (EIA) as well as US economic data and any headlines from the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting for further direction.
The API reported a 4.26mb drop in US crude oil inventories for the week ended January 29, well above the 1.0mb market forecast (average of surveys conducted by Reuters and S&P Global Platts). Data for products were also supportive, with a surprise 0.24mb dip in gasoline stocks (against a 1.32mb expected build) and a larger-than-predicted draw of 1.62mb from distillate inventories (a 0.86mb dip had been predicted). Oil inventory levels at the Cushing, Oklahoma storage hub fell by 1.90mb. The more closely watched report from the EIA is due this morning at 10:30. In refinery news, Reuters reports that private equity firm Cresta Fund Management has offered to buy a majority stake in North Atlantic Refining Ltd, which owns the 135kb/d Come-by-Chance refinery that has been idled since March, with plans to convert it to renewable fuel production.
In economic news this morning, the final Markit Composite PMI for Japan for January came in at 47.1, down from 48.5 previously and still in contractionary territory. The Composite PMI for India, on the other hand, rose from 54.9 to 55.8, indicating the country’s economy expanded more quickly. The Nikkei rose 1.0% and the Hang Seng added 0.2%, but the Shanghai Composite fell 0.5%. European data this morning were supportive. Flash January consumer price inflation for the Eurozone was stronger than expected, with the Harmonized Index of Consumer Prices (HICP) up 0.9% year-on-year, and the final January Eurozone Composite PMI saw a surprise upward revision to 47.8, closer to breakeven. The index for Germany was confirmed at 50.8, just inside of growth territory, and the index for France was revised up from 47.0 to 47.7. Also encouraging, the final UK CIPS/Markit Composite PMI saw an upward revision from 40.6 to 41.2. Finally, Italian consumer price inflation was unexpectedly positive last month with the CPI up 0.5% in the preliminary reading. Market participants had US data in the form of the ADP Employment Report, final Markit Composite PMI and ISM Services index before them on the economic calendar this morning. As of this writing, the FTSE 100 was up 0.2%, the CAC 40 had added 0.4%, and the DAX had gained 0.8%. US stock market index futures were also in the black, with Dow futures steady, S&P 500 futures up 0.3%, and Nasdaq futures trading 0.3% stronger.
The complex strengthened across the board on Tuesday with further strength in global equities, despite strength in the US dollar. Brent climbed $1.11 higher to $57.46/bbl, and WTI settled at $54.76/bb, up $1.21. RBOB futures gained 2.59 cents, settling at $1.6160/g, and ULSD (HO) settled 2.77 cents stronger at $1.6746/g. Per Platts, New York Harbor ULSD barge prices strengthened by 35 points against spot NYMEX, putting the differential at +0.25c/g, and the ULSHO barge differential rose by 25 points to -12.00c/g, while the HSHO differential held steady at -17.50c/g. February propane prices took a tumble yesterday, according to Platts, with Mt. Belvieu non-LST prices down 2 cents to 83.25c/g and LST prices at the hub dropping 4.25 cents to 82.75c/g, although losses at Conway were smaller at 50 points, putting prices there at 87.25c/g.
Natural gas futures were little changed yesterday, settling 50 points in the red at $2.845/mmBtu. The latest 1-5 day ECMWF outlook calls for below-normal temperatures in the Midwest and for much of the East Coast, but near to above-normal temperatures are expected in the Northeast. The 6-10 day forecast calls for much colder than normal temperatures across much of the country.
