Written on: February 2, 2022
Wednesday, February 2, 2022
Energy futures are trading in the black on Wednesday amid supportive crude oil stock data from the American Petroleum Institute (API), weakness in the US dollar, gains in European shares and in US stock market index futures. Market participants were waiting for clarity on the OPEC+ output policy decision and looked to the US ADP Employment Report and to the weekly inventory report from the Energy Information Administration (EIA) for further direction. The OPEC+ group has agreed to stick to its plan to increase production by 0.4 mb/d in March, according to two Reuters sources, despite pressure from top consumers for a larger increase after crude oil prices hit seven-year highs.
The API reported a surprise 1.60mb draw from US crude oil stockpiles for the week ended January 28, while forecasts called for a 1.31mb build (average of polls conducted by Reuters and by S&P Global Platts). Data for distillates were supportive as API showed a slightly larger-than-expected draw of 2.50mb from distillates stocks (vs 1.25mb). Inventory figures for gasoline were bearish as the agency reported a 5.80mb increase in gasoline stockpiles, well above expectations at 1.67mb. According to data from the German network operator Gascade, the Russian Yamal-Europe pipeline, which carries natural gas supplies between Poland and Germany, came to a halt today, prompting expectations that the westbound flows are set to start for the first time since December. After an hour, however, flows were completely halted, dashing those hopes.
The Shanghai and Hong Kong stock exchanges remain closed, while in Tokyo the Nikkei rose 1.7% overnight. Eurozone inflation was stronger than predicted last month, as the flash HICP rose 5.1% year-on-year last month, above expectations at 4.3%. The Narrow Core price level was up as well, by 2.3% year-on-year. The Italian Consumer Price Index rose 4.8% y/y in January, above forecasts at 3.8%. European shares were seeing further gains this morning with the DAX up 0.3%, the CAC 40 having added 0.6%, and the FTSE 100 having gained 0.7%. US stock market index futures were seeing gains of between 0.2% (Dow f) and 1.6% (Nasdaq f), as of this writing. Also supportive for crude oil prices, the US dollar index was down 0.6% this morning.
Energy futures settled flat to higher yesterday amid gains in global equities and weakness in the US dollar. WTI crude edged up 5 cents to settle at $88.20 a barrel, Brent crude fell 10 cents to close at $89.16, gasoline futures gained 2.08 cents to settle at $2.5752 per gallon and heating oil futures settled 2.55 cents stronger at $2.7412 per gallon. Natural gas futures ended their six-session rally yesterday as futures fell 12.3 cents to settle at $4.751 per MMBTU. Propane prices made mixed moves on Tuesday as Mt. Belvieu LST prices rose by 25 points to 131.000 c/g and non-LST prices strengthened by 75 points to 130.750 c/g. Conway spot prices weakened by 50 points to 130.000 c/g.
The latest 1-5 day forecast (EC) remains supportive for the Midwest, while mixed temperatures are expected in the Northeast. The 6-10 day outlook calls for mixed temperatures in both consuming regions.