Brent crude looked set to rise for a fourth consecutive session and WTI, RBOB, and ULSD futures looked headed for a third session higher, as we were seeing modest across-the-board gains in the overnight session on Thursday. The gains came amid mostly higher trade in European shares and in US stock market index futures, despite a continued rebound in the US dollar. Market participants looked ahead to US labor market, productivity and costs, and factory orders data for further direction.
Asian shares fell overnight, with Shanghai Composite shedding 0.4%, the Hang Seng falling 0.7%, and the Nikkei dropping 1.1% lower. In Europe, the FTSE 100 was down 0.4% this morning following disappointing UK economic data. The CIPS/Markit Construction PMI for last month came in at 49.2, down from 54.6, below consensus at 52.8, and in contractionary territory. The Bank of England, consistent with market expectations, made no changes to rates nor to its QE program. Other bourses were seeing gains following encouraging Eurozone retail sales figures for December. Sales jumped 2.0% higher, well above the 0.3% expectation, and the 6.1% drop in November sales was revised to a shallower 5.7% decline. The CAC 40 was up 0.2% and the DAX had gained 0.3% as of this writing.
Market participants looked ahead to weekly US jobless claims, the Challenger Job-Cut Report for January, fourth quarter productivity and costs, and December factory orders for further direction. US stock market index futures were flat to higher, with Dow futures steady, S&P 500 futures up 0.1%, and Nasdaq futures up 0.4%. Whereas this was supportive for crude, a 0.26% jump in the US dollar index to its highest levels since December 2 was unsupportive.
The complex extended its rally on Wednesday, but settled off of the daily highs as EIA petroleum inventory data were neutral to unsupportive, and as European shares come off and settled mixed; US shares closed flat to higher. Brent gained $1.00, hitting $58.46/bbl, and WTI climbed 93 cents higher to close at $55.69/bbl. RBOB futures jumped 3.26 cents higher to settle at $1.6486/g, while ULSD (HO) settled up 1.59 cents at $1.6905/g. Per Platts, New York Harbor ULSHO barge prices weakened by 25 points against NYMEX, putting the differential at -12.25c/g. ULSD and HSHO barge price differentials were steady at +0.25c/g and -17.50c/g, respectively. Propane prices saw flat-to-lower movement yesterday, per Platts, as Mt. Belvieu LST prices held steady at 82.750c/g, while non-LST prices at the Texas hub fell 1.250 cents to 82.000c/g and Conway prices dropped 1.500 cents lower to 85.750c/g.
Natural gas futures lost 5.6 cents yesterday, settling at $2.789/mmBtu. Although there were some slightly unsupportive revisions to the heating degree day and US market balance outlooks, below-normal temperatures are the expectation for the next two weeks overall. The latest 1-5 day ECMWF outlook sees Midwestern temperatures averaging well below normal. East Coast temperatures are expected to be mostly below-normal, except for parts of the Northeast. The 6-10 day outlook remains very supportive, calling for well below normal temperatures across a large part of the country, particularly in the Midwest.
