Written on: October 1, 2019

Heating Oil Price Report

Tuesday, October 1, 2019

WTI crude oil futures looked to snap a five-session streak of declines, seeing gains of about 1% on Tuesday amid strength in US equity index futures. It has been a quiet morning on the newswires. Asian stock markets saw mixed trade last night and European markets were trading mixed as of this writing. While some economic data releases beat expectations, the overall picture presented – largely focused on the manufacturing sector – was downbeat. Market participants are looking ahead to GDP data from Canada and US manufacturing figures for further direction.

In positive news from Japan, the unemployment rate held steady at 2.2% unexpectedly in August. The Tankan survey was more mixed, however, as sentiment at large manufacturers was stronger than expected, but small manufacturers were more pessimistic, and the capex index was weaker than predicted. The Markit Manufacturing PMI for Japan fell further into contractionary territory last month, at 48.9. The Indian manufacturing sector continued to grow (51.4), but Eurozone manufacturing fell deeper below the 50 mark (45.7, beating 45.6 consensus). Germany continued to drag (41.7), whereas France remained (barely, 50.1) in expansionary territory. The UK CIPS Manufacturing PMI strengthened unexpectedly, to 48.3. Back on the unsupportive side, the flash Eurozone HICP showed weaker-than-predicted consumer price inflation of 0.9% year-on-year for September, keeping up the pressure on the ECB to address these weak price pressures. The US dollar was trading slightly north of the unchanged mark as of this writing.

WTI crude futures tumbled $1.84 lower to settle at $54.07 a barrel yesterday, Brent crude fell $1.13 to $60.78 a barrel, gasoline futures fell 4.65 cents, settling at $1.6049 per gallon, heating oil settled at $1.9056, down 3.60 cents per gallon and natural gas futures fell 7.4 cents to settle at $2.330 per MMBTU.

The Energy Information Administration data showed US oil production fell for a third month in July to under 12mb/d and Reuters survey data showing OPEC production fell to an eight-year low of 28.9mb/d last month. The losses also came despite Saudi Arabian Crown Prince Mohammed bin Salman telling 60 minutes that conflict with Iran would bring a jump in oil prices “to unimaginably high numbers.”

The latest 6-10 and 8-14 day outlooks from the National Weather Service call for near to above-normal temperatures in the Midwest and Northeast. Out in the Atlantic, Hurricane Lorenzo continues to move further away from the US. In the Caribbean, the National Hurricane Center is tracking two disturbances, but gives them low chances of 10% to develop into tropical cyclones over the next 48 hours.