Written on: November 4, 2019

Heating Oil and Energy Report for November 2019

Monday, November 4, 2019

Crude oil and refined products futures are rallying in early trading on Monday amid strength in global equities following encouraging European economic data releases and indications that dialogue between the US and China on trade continues.

Asian shares mostly strengthened last session, with the Asia Dow up 0.87%, and European markets were seeing solid gains of around one percent following encouraging economic data. The Eurozone manufacturing PMI for October was revised up unexpectedly from 45.7 to 45.9, closer to the 50 mark and up by 0.2 points from September. The index for Germany was revised up from 41.7 to 42.1, beating expectations (but still very much in contractionary territory), and the index for France was revised up by more than predicted, from 50.1 to 50.7 and more solidly indicating an expansion in the sector. The UK construction PMI rose more than expected last month, from 43.3 to 44.2. Market participants looked ahead to US factory orders data for September for further direction, expected to show a 0.5% decline. Reuters reports that the Chinese Foreign Ministry says China’s President Xi Jinping and President Trump have been in “continuous contact through various means.” US stock market index futures were seeing gains of about 0.5% as of this writing.

In the news, Saudi Aramco has finally announced its long-delayed initial public offering (IPO), to occur on the Saudi domestic exchange, but details were scant. The timing, number of shares, and pricing were not stated. In other OPEC+ news, Russian oil production fell in October, but remained above the country’s output cap. The country’s energy ministry reported that production averaged 11.23mb/d, topping the 11.17mb/d ceiling under the output agreement.

Petroleum futures rallied to gains of over 3% on Friday amid a rally in equities and continued weakness in the US dollar. Commerce Secretary Ross and economic adviser Lawrence Kudlow made optimistic comments regarding US-China trade negotiations, the Markit manufacturing index for China was encouraging, and US labor market data were stronger than expected. Additionally, the US oil rig count fell further last week. WTI crude shot up $2.02, settling at $56.20 a barrel, Brent crude jumped $2.07 higher to close at $61.69 a barrel, gasoline rallied 6.11 cents for a $1.6557 per gallon settlement, heating oil jumped 5.73 cents higher to settle at $1.9331 per gallon and natural gas futures climbed 3.1% to settle at $2.714 per MMBTU.

Weather models see below-normal temperatures across most of the eastern part of the country, including both the Northeastern and Midwestern consuming regions for the next 10 days.