Petroleum futures were seeing gains of over 1.5% in the overnight session on Wednesday amid news that production shutdowns in Texas could last for several days, if not weeks, despite flat-to-lower trade in European equities and in US stock market index futures, as well as strength in the US dollar. Market participants looked ahead to US retail sales, the US Producer Price Index, US industrial production data, and the Canadian CPI for further direction.
Japanese machine orders rose 5.2% in December, while expectations called for a 5.0% drop. Also supportive, the Japanese merchandise trade balance was in a deficit of Y323.9bn last month, well above expectations calling for a deficit of Y600.0bn. Despite supportive economic data out of Japan, the Nikkei closed 0.6% lower, while the Hang Seng added 1.1% and the Shanghai Composite gained 1.4%. In economic news from the UK, the Consumer Price Index fell 0.2% last month, while the Econoday consensus called for a sharper dip of 0.4%. The Producer Price Index (PPI) in the UK for the same month showed a 0.4% increase in output prices (expectations at 0.2%) and a 0.7% rise in input prices (matching expectations). European shares were trading flat to lower this morning with the CAC 40 steady, while the FTSE 100 was down 0.2% and the DAX had lost 0.6%. US stock market index futures were also trading flat to lower with Dow and S&P futures trading flat, while futures for the Nasdaq were down 0.2% as of this writing. Also unsupportive for crude oil prices, the US dollar index was up 0.4%.
Petroleum futures strengthened further on Tuesday amid refinery shutdowns in Texas due to weather and mostly higher trade in US equities. Brent edged up 5 cents to reach $63.35/bbl, and WTI settled at $60.05/bb, up 58 cents. Crack spreads widened yesterday as RBOB futures rallied 8.04 cents, settling at $1.7729/g and ULSD (HO) settled 4.30 cents higher at $1.8144/g. Per Platts, the New York Harbor ULSD barge differential strengthened by 20 points to +0.40c/g, while HSHO and ULSHO barge differentials strengthened by 2.25 cents each to -18.00c/g, and -9.00c/g, respectively. February propane prices hit a new two-year high yesterday, according to Platts, with Mt. Belvieu non-LST prices adding 7.00 cents to 95.75c/g and LST prices jumping 7.25 cents to 96.75c/g. Conway spot price rallied 18.25 cents to 1.0975/g.
Natural gas futures settled 21.7 cents (7.5%) higher at $3.129/mmBtu amid power outages in Texas and a looser US market balance expectation for this week. The latest 1-5 day ECMWF outlook continues to call for double-digit below-normal temperatures in the central part of the country, while below-normal temperatures are expected on the East Coast. The 6-10 day forecast is less supportive with mostly above-normal temperatures expected in both the Midwest and the Northeast.
