Written on: December 1, 2021

Energy Price Report

Wednesday, December 1, 2021

Energy futures are rebounding

Energy futures are rebounding on Wednesday amid gains in European shares and in US stock market index futures, despite unsupportive US crude oil inventory data from the American Petroleum Institute (API). Market participants awaited US economic data in the form of the ADP Employment Report, the Markit Manufacturing PMI, the ISM Manufacturing Index, construction spending, and the weekly EIA inventory report for further direction. OPEC is expected to meet today and the OPEC+ meeting is scheduled for tomorrow.

API reported a draw from US crude oil

The API reported a 0.75mb draw from US crude oil stockpiles for the week ended November 26, while expectations called for a larger draw of 1.97mb (average of polls by Reuters and S&P Global Platts). Data for distillates were neutral as API showed an increase of 0.79mb in distillate stocks, in line with the 0.73mb expectation. Inventory figures for gasoline were bearish as the agency reported a larger-than-expected build of 2.20mb in gasoline stockpiles (vs. 0.46mb).

Overseas Economic Data

The Japanese Jibun Bank Manufacturing PMI came in at 54.5 for November, up from 54.2 in October and indicating growth in the country’s manufacturing sector accelerated. On the other hand, the Chinese Caixin Manufacturing PMI came in at 49.9 for the same month, in contractionary territory, down from 50.6 the month prior and below expectations calling for no change. The Shanghai Composite and the Nikkei closed 0.4% higher overnight and the Hang Seng added 0.8%. The Markit Manufacturing PMI for India came in at 57.6 in November, up from 55.9 in October.

In European news, the final Markit Manufacturing PMI for the Eurozone came in at 58.4, just below consensus at 58.6. The index for Germany also missed expectations by coming in at 57.4 (vs. 57.6), while the French PMI came in at 55.9, above forecasts at 54.6. Retail sales in Germany fell 0.3% in October, missing the Econoday consensus calling for a 1.0% rise. The CAC 40 was up 1.7% this morning and the DAX had added 1.8%. In UK news, the final CIPS/Markit Manufacturing PMI for last month came in at 58.1, just shy of the 58.2 consensus. The FTSE 100 was trading 1.3% higher as of this writing. US stock market index futures were seeing gains of between 0.9% (Dow f) and 1.3% (Nasdaq f). The US dollar index was steady.

Energy futures fell sharply yesterday

Energy futures fell sharply yesterday amid losses in global shares and news that Moderna’s CEO stated that current COVID-19 vaccines might not be as effective against the Omicron variant of coronavirus. WTI crude lost $3.77 to settle at $66.18 b barrel, Brent crude fell $2.87 to close at $70.57, gasoline futures dropped 9.70 cents lower to settle at $1.9801 per gallon and natural gas futures fell 28.7 cents to settle at $4.567 per MMBTU.

Weather Forecast

The latest 1-5 day forecast calls for well-above-normal temperatures across the majority of the country, save for the Northeast. The 6-10 day outlook is similar with below-normal temperatures expected to persist in the Northeast, while near- to above-normal temperatures are seen in the Midwest.