WTI crude futures looked set to extend their rally to a fourth session, and Brent crude futures looked headed for a third consecutive gain this morning amid strength in equities following encouraging European economic data releases, despite strength in the US dollar. Market participants looked ahead to Canadian and US trade data, and to US service sector data for further direction.
Asian shares were mixed overnight, with the Hang Seng adding 0.28% but the Nikkei following US and European shares lower – selling off 2.19%. European shares were rebounding some this morning, following largely encouraging economic data releases. There was a slight, surprise upward revision from the initial estimate of the Markit Eurozone Composite PMI to a final print of 56.2 for September. The index for Germany was revised up from 55.3 to 55.5, and the final index for France came in at 55.3, up from 55.1. Also encouraging, French industrial production grew 1.0% in August, well above the 0.3% expectation and coming with an upward revision to July output growth of 0.2 percentage points to 0.5%. The final Markit/CIPS UK Composite PMI for September came in at 54.9, well above expectations at 54.1. All of these PMI above 50 indicate economic growth, and the upward revisions suggest growth was faster than previously indicated. As of this writing, the FTSE 100 was up 0.60%, the DAX had added 0.35%, and the CAC 40 was trading 0.83% stronger. US stock market index futures were seeing gains of between 0.4% (Nasdaq futures) and 0.5% (Dow and S&P 500 futures). Whereas this was supportive for crude, a 0.15% uptick in the US dollar index (after a three-session slide) was unsupportive.
Crude futures rallied to gains of over two percent yesterday as OPEC+ decided to continue increasing production by 0.4mb/d in November and through at least April of next year – contrary to talk last week that a larger increase in the output ceiling could be coming. Additionally, the US dollar weakened against a basket of currencies during the session. Brent jumped $1.98 higher to $81.26/bbl, and WTI settled $1.74 stronger at $77.62/bbl. RBOB futures jumped 5.85 cents higher to settle at $2.3085/g, and ULSD (HO) settled at $2.4366/g after a 5.39-cent climb. In the New York Harbor cash market, ULSD and ULSHO barge price differentials to NYMEX held steady at +0.45c/g and -13.75c/g, respectively yesterday according to Platts. The ULSD-ULSHO spread thus remained steady despite Biodiesel (D4) RIN prices rising from 149 to 156 cents. The HSHO barge price differential weakened by 50 points to -21.25c/g. According to Platts, propane prices rallied yesterday. Mt. Belvieu non-LST prices shot up 3.125 cents to 151.750c/g, LST prices at the hub gained 1.500 cents to reach 150.250c/g, and Conway prices strengthened 1.250 cents to hit 150.000c/g.
NYMEX natural gas futures rose 14.7 cents to settle at $5.766/mmBtu yesterday with a tighter US market balance forecast for this week (Refinitiv) and a stronger two-week degree day forecast (GFS). As of this morning, the latest 1-5, 6-10, and 11-15 day outlooks based on the European model call for above-normal temperatures in the Midwest and on the East Coast. Per the National Hurricane Center, things have quieted down in the Atlantic. There is a disturbance near the central Bahamas, but the NHC gives it a near-zero chance of tropical cyclone formation over the next two days.
