Written on: December 1, 2020

Energy Price Report

Tuesday, December 1, 2020

Energy prices are seeing flat-to-higher prices on Tuesday, with strength in global equities following encouraging economic data releases from Asia and Europe, slight weakness in the US dollar supporting, whereas indications of disagreement among OPEC members were likely unsupportive. Market participants looked ahead to data on the Canadian economy and the US manufacturing and construction sectors for further direction, while keeping an eye out for OPEC+ developments.

Reuters reports that, according to three sources, OPEC has postponed output policy talks until Thursday amid disagreement among key players. The current schedule calls for OPEC oil production to rise by 2 million barrels per day in January, but OPEC is looking to extend the current 7.7 million barrel per day cuts for an additional three months. In other unsupportive supply-side news, the Norwegian Energy Ministry says Norwegian oil output cuts will end on December 31st.

The Caixin Manufacturing PMI for China rose from 53.6 in October to 54.9 last month, indicating the country’s vast manufacturing sector expanded more quickly. The final November Nikkei/Markit Manufacturing PMI for Japan came it at 49.0, closer to the 50.0 breakeven mark. On the other hand, the Japanese unemployment rate saw a 0.1 percentage point uptick to 3.1% in October. Still, the Nikkei climbed 1.3% higher overnight, the Shanghai Composite strengthened 1.8%, and the Hang Seng rose 0.9%. Growth in the Indian manufacturing sector slowed some last month, as the Markit/Nikkei PMI fell from 58.9 to a still-strong 56.3.

In European news, the flash Harmonized Index of Consumer Prices fell 0.3% last month, shallower than the 0.4% expected dip and the final Markit Manufacturing PMI for the zone came in at 53.8, beating consensus at 53.6. The index for France (49.6) beat expectations, while the German PMI came in just 0.1 points below consensus, at 57.8. In encouraging news, the German unemployment rate saw a surprise 0.1pp dip in October to 6.1%. In UK news, the final CIPS/Markit Manufacturing PMI for last month came in at 55.6, above consensus at 5.2. Additionally, the Nationwide House Price Index rose 0.9% in November, topping forecasts at 0.3%. As of this writing, the FTSE 100 had rallied 2.0%, the DAX had gained 1.0%, and the CAC 40 had strengthened 1.1%. US stock market futures are seeing similar gains with Nasdaq futures up 0.9% and both Dow and S&P 500 futures up 1.1%. Also supportive for crude, the US dollar index was down by 0.1%.

Crude futures fell for a second consecutive session on Monday with weakness in equities following disappointing US economic data releases and an uptick in the value of the US dollar against a basket of currencies. WTI crude shed 19 cents to settle at $45.34 a barrel, Brent crude closed 59 cents weaker at $47.59 a barrel. Losses were sharper on the product end of the barrel with gasoline falling 3.31 cents to settle at $1.2489 per gallon and heating oil settling at $1.3559 per gallon for a loss of 2.46 cents. According to Platts, New York Harbor distillate barge prices weakened by 30 points against NYMEX across the board, putting heating oil at parity to NYMEX HO, ULSHO at -8.20c/g, and HSHO at -15.30c/g. Propane prices strengthened yesterday, per Platts, with LST prices up 1.375 cents to 56.875c/g and non-LST prices gaining one cent to reach 57.000c/g. Conway prices jumped 1.6725 cents higher to 54.375c/g.

NYMEX natural gas futures rose 3.9 cents, settling at $2.882 per MMBTU with a stronger two-week degree day forecast. As of this morning, the latest ECWMF model calls for above-normal temperatures in the Northeast and near the Great Lakes over the next 5 days, but with cooler temperatures coming to the East Coast in the 6-10 day period.