Crude oil and refined products were trading flat to lower as of this writing in the overnight session on Thursday, amid strength in the US dollar and weakness in global shares, but with news of another missile strike at Saudi Aramco facilities likely supporting, as market participants awaited an OPEC+ output policy decision.
Reuters reports that Houthi forces in Yemen fired a missile at a Saudi Aramco facility in Jeddah, according to a Houthi military spokesperson. There was no immediate confirmation from Saudi authorities. In other news this morning, the Intercontinental Exchange (ICE) plans to run two Dated Brent contracts next year. Platts is adding WTI Midland to its dated Brent benchmark and moving from a free on board (FOB) to a cost, insurance and freight (CIF) assessment from June of next year. ICE is looking at running a continued Platts FOB assessment, and another with the new CIF-based assessment, so that the market can choose which one to adopt.
Asian shares fell sharply overnight, with the Shanghai Composite, Hang Seng, and Nikkei all dropping 2.1% lower. European shares were also in the red this morning, following mixed economic data releases. On the plus side, the Eurozone unemployment rate for December was revised down by 0.2pp to 8.1%, and held there in January, beating expectations at 8.3%. On the other hand, retail sales in the zone tumbled 5.9% lower in January, much worse than the 1.1% expected contraction. The CAC 40 was down 0.3% as of this writing, and the DAX had lost 0.5%. The CIPS/Markit Construction PMI for the UK strengthened back into expansionary territory last month, rising from 49.2 and past consensus at 51.5 to 53.3. Nevertheless, the FTSE 100 was down 1.0% this morning. US stock market index futures were also down, with losses of about 0.3% in the major indexes. Also unsupportive for crude, the US dollar index was up 0.24%. Along with the OPEC+ output decision, market participants were looking ahead to weekly US jobless claims data, productivity and costs data for the fourth quarter (the second estimate) and January factory orders for further direction.
Brent crude futures climbed $1.37 higher to $64.07/bbl, and WTI crude futures jumped $1.53 higher to settle at $61.28/bbl yesterday, following bullish weekly US product inventory data – despite a record weekly US crude stock build per the EIA report. RBOB futures rose 1.54 cents, settling at $1.9518/g, and ULSD (HO) strengthened 2.76 cents to settle at $1.8357/g. At New York Harbor, Platts ULSD and ULSHO barge price assessments weakened against spot NYMEX yesterday, with the ULSD differential falling by 30 points to -0.10c/g and the ULSHO differential dropping 1.75 cents lower to -14.25c/g. HSHO barge prices held at -18.25c/g to futures. Spot propane prices fell yesterday, amid neutral weekly EIA inventory data. Mt. Belvieu LST and non-LST prices each shed 75 points, dipping to 96.625c/g and 96.500c/g, respectively, according to Platts. Conway prices dropped 2.125 cents lower to 87.625c/g, widening the recently normalized north-south spread.
NYMEX natural gas futures shed 2.3 cents yesterday, settling at $2.816/mmBtu, despite unsupportive shifts to the temperature outlook. The latest 1-5 day ECMWF outlook calls for large deviations above normal for Midwestern temperatures, but below-normal temperatures on the East Coast, especially in New England. The 6-10 day outlook, however, sees well-above-normal temperatures across the eastern two-thirds of the country. The EIA is due to release its natural gas storage report for the week ended February 26 this morning, and a poll of analysts conducted by Reuters calls for a 136bcf withdrawal to be reported. This would exceed last year’s 119bcf drop and also the 81bcf five-year average.
