Petroleum futures were seeing mixed trade near the unchanged mark in the overnight session on Thursday, with an upward oil price forecast revision by Barclays, stronger than expected European economic data, weakness in the US dollar index, and Pfizer vaccine efficacy data likely supporting, whereas trade in European shares and in US stock market index futures was unsupportive. Market participants looked ahead to data on US durable goods orders, jobless claims, pending home sales, and Gross Domestic Product for further direction.
Following upward oil price forecast revisions from Goldman Sachs and Morgan Stanley, Barclays raised its 2021 oil price forecast today, citing weaker than expected US supply response to elevated prices, and a faster normalization of inventory levels due to the recent output disruption on the Gulf Coast. The Bank sees Brent prices averaging $62/bbl this year, up by $7 from the previous forecast, and raised its WTI price forecast by $6 to $58/bbl.
In supportive news this morning, Reuters reports that the first large-scale (1.2 million people) real-world study of the Pfizer/BioNTech coronavirus vaccine showed 94% efficacy in preventing symptomatic COVID-19 cases, and that a single shot was 57% effective after two weeks. These findings were published in the New England Journal of Medicine yesterday. Also supportive were European economic data releases. The GfK index of the German consumer climate picked up from -15.5 to -12.9 this month, beating consensus at -14.0. Italian manufacturing (99.0) and consumer confidence (101.4) also beat expectations this month (96.0 and 101.0, respectively), and the European Commission’s Economic Sentiment index for the Eurozone as a whole strengthened from 91.5 and beyond expectations at 92.3, to 93.4 this month. Despite the positive data, the DAX was down 0.4% and the CAC 40 was steady this morning; the FTSE 100 was up 0.2%. US stock market index futures were flat to lower, with Dow futures steady, S&P 500 futures down 0.3%, and Nasdaq futures trading 1.0% weaker. Whereas this was unsupportive for crude, a 0.4% drop in the US dollar index was supportive.
The complex strengthened across the board on Wednesday, with the Johnson & Johnson one-shot COVID-19 vaccine moving closer to emergency approval following an efficacy and safety statement from the Food and Drug Administration, stronger than expected German economic growth in the fourth quarter, and supportive US economic data releases, despite bearish weekly crude oil and gasoline inventory figures from the EIA. WTI climbed $1.55 higher, settling at $63.22/bbl, and Brent prices strengthened by $1.67, closing at $67.04/bbl. RBOB futures rose 3.70 cents to settle at $1.8956/g, while ULSD (HO) climbed 4.03 cents higher, settling at $1.9083/g. EIA inventories were supportive for distillates. New York Harbor ULSD and HSHO barge price differentials to NYMEX weakened yesterday, according to Platts, with ULSD down 25 points to -0.10c/g, and HSHO down 2.25 cents to -19.25c/g. The ULSHO differential held steady at -12.75c/g. EIA propane/propylene stock data were bullish, and propane prices strengthened along with crude yesterday. Per Platts, Mt. Belvieu non-LST prices jumped 2.750 cents higher to 97.500c/g and LST prices climbed 2.250 cents higher to 98.000c/g. Conway prices rocketed 13.125 cents higher to 135.125c/g.
Natural gas futures shed 2.5 cents, with the front-month contract going off the board at $2.854/mmBtu. Near-term temperature expectation revisions and revisions to the outlook for the US market balance next week were unsupportive. The latest 1-5 day ECMWF outlook calls for above-normal temperatures across the eastern half of the country. The 6-10 day outlook sees near to below-normal temperatures in the Northeast, but above-normal temperatures in the Midwest and elsewhere on the East Coast. This morning’s EIA report is expected to show a sharp 333bcf withdrawal from natural gas storage for the week ended February 19.
