Written on: February 3, 2020

Energy Price Report

Monday, February 3, 2020

Crude futures are trading in red on Monday amid continued demand concerns from the coronavirus outbreak and gains in the US dollar, despite gains in US stock market index futures and European equities, and possible further output cuts by OPEC+. The US Dollar Index was up 0.30%, which is unsupportive for crude. US stock market index futures were seeing gains of between 0.49% (Dow) and 0.61% (Nasdaq) this morning. Two sources within OPEC said that the group is considering a further cut in their oil output of 500,000 bpd. In addition, the group is also considering holding their meeting on Feb 14th, ahead of a previously scheduled meeting in March.

Asian stock markets traded mixed overnight. The Shanghai Composite fell sharply by 7.72%, the Nikkei was down 1.01%, while the Hang Seng was up 0.17%. The Chinese Caixin Manufacturing PMI for January came in at 51.1, just below the Reuters forecast at 51.3. Japan’s Manufacturing PMI for the same month came in at 48.8, down from 49.3 last month. The January manufacturing PMI in India was a beat by coming in at 55.3 (vs. 52.8). European shares were seeing gains this morning following the release of supportive economic data. The Eurozone’s Manufacturing PMI for January came in at 47.9, just above expectations at 47.8. The French Manufacturing PMI for the same month came in at 51.1, slightly above the Econoday consensus at 51.0. Finally, the UK’s CIPS/PMI Manufacturing Index for January came in at 50.0, while forecasts called for a 49.8 figure. Market participants looked ahead to the US Manufacturing PMI, the ISM Manufacturing Index, and construction spending for further direction.

The complex weakened further on Friday amid continued coronavirus-related fears and losses in US equities. WTI crude lost 58 cents, settling at $51.6 a barrel. Brent crude fell by 13 cents to close at $58.16 a barrel, gasoline futures lost 50 points to $1.4887 per gallon, heating oil settled 1.51 cents lower at $1.6245 per gallon and natural gas futures edged up 1.2 cents to settle at $1.841 per MMBTU.

The latest 1-5 day forecast model calls for above-normal temperatures on the East Coast and the Midwest. The 6-10 day outlook sees above-normal temperatures in the Northeast, but near to below-normal temperatures in the Midwest.