Written on: September 1, 2020

Energy Price Report for September 2020

Tuesday, September 1, 2020

Crude oil and refined products are strengthening on Tuesday, with fresh multi-year lows in the US dollar and mostly higher trade in global equities likely supporting. Market participants are looking ahead to US manufacturing and construction data for further direction.

The Japanese unemployment rate rose from 2.8% to 2.9% in July, but this didn’t beat expectations calling for a larger increase to 3.0%. The August Jibun Manufacturing PMI was finalized at 47.2, up from 46.6 previously and a 45.2 print for July. The Markit/Nikkei Manufacturing PMI for India recovered from a 46.0 reading in July to 52.0 this month, back in expansionary territory. The Nikkei and the Hang Seng were little changed overnight, while the Shanghai Composite added 0.4%.

European shares are mixed this morning amid mixed economic data releases. Consumer price inflation in the Eurozone was weaker than expected last month, with the Harmonized Index of Consumer Prices seeing a surprise 0.2% year-on-year decline (consensus called for a 0.2% rise), and the Underlying HICP rose just 0.4% year-on-year, well below forecasts at 1.0%. The Eurozone unemployment rate rose from a downwardly-revised 7.7% in June to 7.9% in July, but this beat the 8.0% expectation. In neutral news, the final August Manufacturing PMI for the zone came in at 51.7, matching consensus. Despite the mixed data, the CAC 40 was trading 0.5% higher and the DAX had strengthened 0.8% as of this writing. Meanwhile, the FTSE 100 in the UK was down 1.1%. Ahead of US data in the form of the ISM Manufacturing Index for August (consensus at 54.5) and July construction spending (growth predicted at 1.0%), US stock market index futures is trading flat to higher, with Dow futures steady while S&P futures are up 0.3% and Nasdaq futures is strengthening by 0.9%.

Energy prices fell across the board on Monday amid weakness in equities, but with weakness in the dollar and signs of UAE compliance with the OPEC+ agreement likely helping limit losses. WTI crude shed 36 cents to settle at $42.61 a barrel, Brent crude futures lost 53 cents to close at $45.28 a barrel, gasoline futures dropped 3.94 cents for a settlement at $1.2761 per gallon, heating oil futures closed 2.01 cents weaker at $1.1961 per gallon and natural gas futures on shed 2.7 cents to end the day at $2.630 per MMBTU.

As of this morning, the National Hurricane Center sees a high chance of 70% that a tropical wave in the Caribbean will develop into a tropical cyclone. Meanwhile, Tropical Depression 15 is located off of the North Carolina coast but headed east-northeast away from land.