The complex was falling further in the overnight session on Wednesday, which would be a fourth session lower for crude oil and a third session lower for products, amid strength in the US dollar, weakness in European equities and in US stock market index futures, as well as an unsupportive note from the IEA regarding the global oil demand recovery, despite supportive US crude oil inventory data from the American Petroleum Institute (API). Market participants looked ahead to the weekly EIA inventory report, US housing starts and permits, the Canadian Consumer Price Index, and the US FOMC policy announcement for further direction.
The API reported a 1.00mb draw from US crude oil stockpiles for the week ended March 12, while expectations called for a build of 1.68mb (average of polls by Reuters and S&P Global Platts). Data for distillates and gasoline were unsupportive as API showed a 0.90mb build in distillate stocks, while forecasts called for a decrease of 2.14mb, and the industry group reported a smaller-than-expected draw from gasoline inventories of 0.93mb (vs. 2.20mb). The more closely watched EIA report is due at 10:30am.
The International Energy Agency said in its latest report that oil prices are unlikely to see a dramatic and sustained surge or a super-cycle despite expectations that vaccines would boost global demand later this year. The agency said that this is due to oil inventories looking sufficient compared with historical levels and that a large amount of spare production capacity has built up as a result of OPEC+ supply cuts. The IEA also said that demand won’t return to pre-pandemic levels until 2023.
Asian stock markets were steady overnight with the Nikkei and the Shanghai Composite edging down 0.02% and 0.03%, respectively, while the Hang Seng edged up 0.02%. The Japanese merchandise trade balance was in a surplus of Y217.4bn last month, below expectations calling for a surplus of Y420.0bn. In European news this morning, the Harmonized Index of Consumer Prices (HICP) for the Eurozone rose 0.2% last month, as expected. The Narrow Core price level rose 0.1%, also matching expectations. European shares were trading flat to lower this morning with the DAX steady, while the CAC 40 was down 0.3% and the FTSE 100 had lost 0.6%. US stock market index futures were seeing similar trade with Dow futures trading flat, while futures for the S&P 500 and the Nasdaq were down 0.3% and 1.0%, respectively. Also unsupportive for crude oil prices, the US dollar index was up 0.1%.
Petroleum futures fell further on Tuesday amid news that some European countries have suspended use of the AstraZeneca vaccine and unsupportive economic data releases from the US. Brent lost 49 cents to settle $68.39/bbl and WTI fell 59 cents to close at $64.80/bbl. RBOB futures edged down 34 points, settling at $2.1012/g and ULSD (HO) dropped 1.62 cents to $1.9327/g. Per Platts, the New York Harbor ULSHO barge differential weakened by one cent to -17.25c/g, while ULSD and HSHO differentials held steady at -0.40c/g and -23.25c/g, respectively. March propane prices fell along with crude yesterday, according to Platts, with Mt. Belvieu non-LST prices down 1.875 cents to 92.000c/g and LST prices losing 1.625 cents to 92.625c/g. The Conway spot price fell 1.250 cents to 84.750c/g.
Natural gas futures rose 7.8 cents to settle at $2.562/mmBtu with a tighter market balance expectation for next week. The latest 1-5 day ECMWF outlook calls for mostly above-normal temperatures in the Midwest, while mixed temperatures are expected in the Northeast. The 6-10 day forecast sees above-normal temperatures across the eastern half of the country.
