Petroleum futures were trading in the black in the overnight session on Wednesday despite bearish US crude oil inventory data from the American Petroleum Institute (API), strength in the US dollar, and mixed trade in European shares and in US stock market index futures. Market participants awaited the US Consumer Price Index, the Bank of Canada’s monetary policy announcement, and the weekly inventory report from the Energy Information Administration (EIA) for further direction.
The API reported a 12.80mb build in US crude oil stockpiles for the week ended March 5, well above expectations calling for a 1.76mb increase (average of polls by Reuters and S&P Global Platts). Data for distillates were neutral to supportive as API showed a larger than expected draw of 4.80mb from distillate stockpiles (vs 3.67mb). The API figures were bullish for gasoline as the industry group reported a draw of 8.50mb from gasoline inventories, while forecasts called for a smaller decrease of 4.13mb. Cushing, OK crude oil inventories rose by 0.30mb last week, per API. The more closely watched EIA report is due at 10:30am.
Asian stock markets closed mixed overnight with the Nikkei edging up 0.03% and the Hang Seng adding 0.47%, while the Shanghai Composite edged down 0.05%. The Chinese Producer Price Index rose 1.7% year-on-year last month, above expectations at 1.5%. The Consumer Price Index in China rose 0.6% in February, above the Econoday consensus at 0.4%. In European news, industrial production in France grew 3.3% in January, beating forecasts at 0.5%. As of this writing, the DAX was up 0.3% and the CAC 40 had added 0.6%, while the FTSE 100 was down 0.2%. US stock market index futures were also trading mixed this morning with futures for the Nasdaq down 0.1%, where as S&P 500 futures and Dow futures were up 0.1% and 0.3%, respectively. The US dollar index was up 0.14%, which is unsupportive for crude prices.
Crude futures weakened on Tuesday amid news that the EIA revised up its US oil production forecast for this year, despite gains in equities and weakness in the US dollar. Brent lost 72 cents to settle $67.52/bbl and WTI fell $1.04 to close at $64.01/bbl. RBOB futures edged up 15 points, settling at $2.0502/g, while ULSD (HO) edged down 12 points to $1.9073/g. Per Platts, New York Harbor ULSD and ULSHO barge differentials weakened by 50 points and one cent to -1.00c/g and -16.00c/g, respectively, while the HSHO differential held steady at -21.00c/g. March propane prices fell along with crude yesterday, according to Platts, with Mt. Belvieu non-LST prices down 1.625 cents to 92.000c/g and LST prices losing 1.875 cents to 92.375c/g. The Conway spot price fell 3.500 cents to 84.750c/g.
Natural gas futures edged down 20 points to settle at $2.662/mmBtu amid a weaker two-week heating degree day forecast and a looser market balance expectation for next week. The latest 1-5 day ECMWF outlook calls for well-above-normal temperatures across the eastern half of the country. The 6-10 day forecast is more supportive with mixed but mostly above-normal temperatures seen in the Midwest, while below-normal temperatures are expected in the Northeast.
