Petroleum futures were seeing modest strength in the overnight session on Thursday amid mostly higher trade in global equities, ahead of the OPEC+ meeting. Market participants were also looking ahead to US jobless claims, manufacturing, and construction spending data for further direction, as well as the Baker Hughes rig count report.
OPEC+ ministers meet today to consider output policy for May, and perhaps beyond. Recent indications have been that Saudi Arabia and Russia would mostly like to see policy roll over given the rising coronavirus case counts and renewed restrictions in various countries. Russia may seek another increase to its output ceiling, while indications have been that Saudi Arabia is willing to maintain its large voluntary output cuts. The OPEC+ Joint Technical Committee this week made bearish revisions to its 2021 oil market forecast, seeing stronger supply growth and weaker demand growth this year. In separate, but related news from Reuters, US Energy Secretary Granholm had a call with Saudi Energy Minister Abdulaziz Bin Salman, in which the importance of “international cooperation to ensure affordable and reliable sources of energy for consumers” was stated. Reuters reports that three sources are now indicating a shift, and that OPEC+ may now also consider raising output – by perhaps 0.5mb/d according to two sources.
Movements in global share prices this morning were supportive for crude. The Jibun Bank Manufacturing PMI for Japan rose from 52.0 to 52.7, indicating a stronger expansion in the sector. The South Korean manufacturing sector also continued to expand this month, with the IHS Markit PMI holding at 55.3, and so did the Chinese manufacturing sector per the Caixin PMI, although this fell from 50.9 to 50.6, below the Reuters poll average at 51.3. The Shanghai Composite rose 0.71%, the Hang Seng shot up 1.97%, and the Nikkei strengthened 0.72%. European shares were seeing more modest gains this morning, following mostly encouraging economic data releases. Although German retail sales growth of 1.2% in February was a miss (consensus was at 2.0%), the final Markit Manufacturing PMI held at a strong 66.6, as expected, the index for France saw a surprise upward revision to 59.3, and the index for the Eurozone as a whole showed a surprise upward revision to 62.5. The CIPS/Markit Manufacturing PMI for the UK was also a beat, revised up unexpectedly from a preliminary reading of 57.9 to 58.9. As of this writing, the FTSE 100 was up 0.51%, the DAX had gained 0.38%, and the CAC 40 was trading 0.24% higher. Futures for the major US stock market indexes were trading flat to higher, with Dow futures up 0.04%, S&P 500 futures up 0.3%, and Nasdaq futures having gained 0.93%. The US dollar index was flat.
The complex fell on Wednesday amid a bearish 2021 oil market forecast revision from the OPEC+ Joint Technical Committee, ahead of today’s OPEC+ policy setting meeting, and with losses in European shares also likely weighing, whereas weekly EIA crude stock data, weakness in the dollar, and strength in US shares were supportive. Brent crude fell 60 cents to $63.54/bbl and WTI crude dropped $1.39 to $59.16/bbl. On the product end of the barrel, RBOB futures fell 3.57 cents to $1.9533/g and April ULSD (HO) futures went off the board at $1.7713/g after a 1.79-cent drop. According to Platts, New York Harbor cash market differentials saw flat-to-higher movement against May NYMEX. The HSHO barge price differential strengthened by 15 points to -25.10c/g, while the ULSD and ULSHO differentials were steady at -0.10c/g and -15.25c/g, respectively. Mt. Belvieu propane prices strengthened yesterday, according to Platts. EIA reported a surprise draw from propane/propylene stocks. Mt. Belvieu non-LST prices jumped 2.625 cents higher to 93.000c/g, LST prices at the hub climbed 1.25 cents higher to 92.375c/g, but Conway prices slipped 12.5 points lower to 85.125c/g.
NYMEX natural gas futures edged down 1.5 cents to $2.608/mmBtu yesterday with unsupportive shifts to the temperature outlook. The EIA is due to release weekly natural gas storage figures this morning, and a Reuters poll calls for a 21bcf injection, which could be an early start to the injection season. Last year, storage levels fell by 20bcf, and the five-year average is a 24bcf withdrawal.
