Petroleum futures were seeing flat-to-lower trade near the unchanged mark in the overnight session on Tuesday, following a six-session rally in Brent and a four-session rally in WTI crude futures. Weakness in European shares and in US stock market index futures likely weighed, whereas a continued decline in the US dollar index likely helped limit losses. Market participants looked to the US Job Openings and Labor Turnover Survey (JOLTS) for further direction on an otherwise quiet day on the economic calendar.
Asian shares strengthened overnight, with the Nikkei up 0.4%, the Hang Seng gaining 0.5%, and the Shanghai Composite rallying 2.0%. European news this morning was disappointing. Italian industrial production saw a surprise 0.2% contraction in December, against expectations for a 0.3% expansion. In Germany for the same month, the merchandise trade surplus fell from a previously-estimated E16.4bn in November to E16.1bn, and the November surplus was revised down to E15.9bn. The DAX was down 0.5% as of this writing, while the CAC 40 and FTSE 100 were just south of the unchanged mark. US stock market index futures were also in the red, with Dow futures down 0.2% and futures for both the S&P 500 and Nasdaq down 0.1%. The US JOLTS is expected to show 6.400m job openings for the month of December, down from 6.527m openings in November. The US dollar index was seeing a fairly sharp decline of 0.4% this morning, headed for its third session lower.
Crude futures extended their rally and posted gains of over two percent on Monday, amid news that Libyan oil production had fallen to about 1.0mb/d (from a recent peak of about 1.3mb/d) due to an ongoing guard strike at the Hariga port, and with continued gains in equities. Brent closed $1.22 stronger at $60.56/bbl and WTI gained $1.12, settling at $57.97/bbl. RBOB futures settled 2.55 cents stronger at $1.6748/g, and ULSD (HO) gained 3.41 cents to settle at $1.7478/g. According to Platts, the ULSHO barge price differential to NYMEX at New York Harbor strengthened by 40 points to -11.35c/g yesterday, while the ULSD and HSHO differentials held steady at +0.05c/g and -20.25c/g, respectively. February propane prices, per Platts, climbed further yesterday – particularly at Conway. Conway prices shot up 7.000 cents to 96.500c/g, a wide premium over Mt. Belvieu non-LST prices, which rose 2.375 cents to 87.250c/g, and over LST prices which climbed 1.875 cents higher to 88.375c/g. Forecasts calling for frigid Midwestern temperatures over the next 10 days may be supporting pricing at the Kansas hub.
Natural gas futures on NYMEX added 1.9 cents yesterday, settling at $2.882/mmBtu, with continued calls for cold weather in the near-term. The latest 1-5 day ECMWF forecast sees very large deviations below normal in temperatures across the Pacific Northwest, Midwest, and also (but with generally smaller deviations) on the Northeast. The 6-10 day outlook calls for below-normal temperatures across the country, again with double-digit deviations below normal in the central third.
