Written on: August 4, 2020

Energy Price Report

Tuesday, August 4, 2020

Crude futures are falling on Tuesday morning following two sessions higher prices amid US-China tensions and rising coronavirus cases. The US stock market index futures are also in the red and the US dollar index is seeing a modest rise. Data on producer prices in the Eurozone are encouraging and European shares are mixed but mostly higher. Market participants are looking ahead to US factory orders data for further direction, while keeping an eye on US-China developments and on talks between Democrats and the White House on a coronavirus aid package.

US-China tensions have been further stoked as the President Trump stated yesterday that the US government should receive a “substantial portion” of any sale of TikTok’s US operations. Beijing, according to the China Daily, responded by saying China would not accept the “theft” of the company. Also likely weighing on valuations this morning, global coronavirus case counts hit 18.35 million according to a Reuters tally, with deaths approaching 700,000. The tally puts US cases at 4.73 million, with US deaths approaching 156,000.

Asian shares strengthened overnight, following the rally in Europe and strength in the US market. The Nikkei climbed 1.7% higher and the Hang Seng rallied 2.0%, while the Shanghai Composite edged up 0.1%. Producer prices were stronger than expected in June in the Eurozone, as the PPI saw a larger-than-expected monthly rise of 0.7% (consensus was 0.5%). The DAX was off 0.4% after its rally yesterday, but the CAC 40 was just north of the unchanged mark and the FTSE 100 had added 0.2%. US factory orders for June rose 5.2% after an 8.0% increase in May.

The complex strengthened across the board on Monday, seeing gains of over 1.4%, amid strength in US and European shares following encouraging manufacturing data releases. Brent crude futures rose 63 cents to close at $44.15 a barrel, WTI crude climbed 74 cents higher, settling at $41.01 a barrel, gasoline futures rallied 4.20 cents to settle at $1.2131 per gallon, heating oil closed 1.69 cents stronger at $1.2409 per gallon and natural gas futures rallied, gaining 30.2 cents and settling at $2.101 per MMBTU.