Written on: July 1, 2021

Energy Price Report

Thursday, July 1, 2021

Energy futures are seeing gains

Energy futures are seeing gains of two percent or higher in early trading on Thursday. There are indications that OPEC+ is leaning towards a smaller than previously expected increase in the output ceiling for August, the US dollar index was weakening slightly, European, Indian product demand looks to be rebounding and US (futures) stock market indexes is higher.

OPEC+ is headed towards agreeing

Reuters reports that OPEC+ is headed towards agreeing on a 2mb/d increase in production from August through December. If the increase is spread evenly, this would amount to 400kb/d per month, which would be smaller than the 500kb/d consensus increase for August – a possible source of support for the price action this morning. Also supportive, Reuters reports that Indian gasoline and gasoil sales strengthened this month with stronger economic activity as lockdowns ease. Gasoline sales shot up 29% from May and gasoil sales jumped almost 19% higher. Sales compared to June of last year were up 5.7% and down 1.8%, respectively.

Economic data from Japan and China were disappointing

Economic data from Japan and China were disappointing, and shares in Tokyo fell 0.29% and Shanghai shares shed 0.07%. The Hong Kong exchange was closed for a holiday. The final June Nikkei Manufacturing PMI for Japan came in at 52.4, down from 53.0 previously. The Caixin Manufacturing PMI for China came in at 51.3, below consensus at 51.9 and down from 52.0. While the expansion slowed in these manufacturing sectors, Indian manufacturing fell into contraction last month with the Nikkei/Markit PMI dropping from 50.8 to 48.1. European shares were strengthening this morning following mostly encouraging economic data releases. The Markit Eurozone Manufacturing PMI for June came in at 63.4, up from the 63.1 preliminary. The index for France was a beat at 59.0, and so was the German reading at 65.1. German retail sales growth of 4.2% in May was a miss, and so was the CIPS/Markit Manufacturing PMI for the UK, at 63.9. As of this writing, the FTSE 100 was up 0.95%, the CAC had gained 0.56%, and the DAX was up 0.42%. US stock market index futures were flat to higher, with futures for the Nasdaq steady while S&P 500 and Dow futures were up about 0.2%. The US dollar index was down 0.2%, also supportive for crude prices.

Across-the-board gains on Wednesday

Energy prices posted modest across-the-board gains on Wednesday following bullish US crude oil stock data from the EIA, while weakness in European shares and strength in the dollar may have helped limit the upside. Brent crude rose 37 cents to $75.13 a barrel, WTI crude settled 49 cents higher at $73.47, gasoline futures settled up 54 points at $2.2444 per gallon, heating oil settled higher at $2.1287 per gallon and natural gas futures settled two cents higher at $3.650 per MMBTU.