Written on: July 5, 2022
Tuesday, July 5th
Energy futures are trading flat to lower Tuesday morning with a rally in the dollar & weakness in European shares and in US stock market index futures likely weighing on the price action, even as Norwegian oil and gas workers went on strike.
Reuters reports that Norwegian oil workers went on strike at three fields: Gudrun, Oseberg South, and Oseberg East, and strike action is set to expand to three more fields tomorrow night. Approximately 15% of the country’s oil output and 25% of the country’s gas output could be cut by Saturday. Norway is Europe’s second-largest energy supplier after Russia.
Asian shares trade flat to higher. The Shanghai Composite edged down 0.04%, while the Hang Seng added 0.10% and the Nikkei climbed 1.03% higher. The final Jibun Bank Composite PMI for June came in at 53.0, up from 52.3 in May. Also supportive, the Caixin China Composite PMI jumped up from 42.2 in May to 55.3, solidly in expansionary territory. European indexes were seeing losses of over one percent this morning despite mixed data releases. French industrial output growth was zero in May, just under expectations calling for a 0.1% uptick. The final S&P Global Composite PMI for France saw a surprise downward revision to 52.5, but the index for Germany was left unrevised at 51.3 and the index for the Eurozone as a whole saw a surprise upward revision to 52.0. Also supportive, CIPS/S&P Global Composite PMI for the UK saw a surprise upward revision to 53.7. Futures for the major US stock market indexes were seeing losses of between 0.9% (Dow futures) and 1.2% (Nasdaq futures). Also likely weighing on the oil price action this morning, the US dollar had rallied to gains of 1.1% and the index was at its strongest levels since 2002.
The complex strengthened by over two percent across the board on Friday ahead of the long weekend, with flat-to-higher trade in equities and the declaration of force majeure at Libyan oil facilities, despite strength in the dollar. Brent crude closed $2.60 higher at $111.63 a barrel, WTI crude settled $2.67 higher at $108.43, gasoline futures shot up 15.15 cents to settle at $3.6878 per gallon, heating oil settled 10.84 cents stronger at $3.9389 per gallon and natural gas futures posted gains of over 30 cents to settle at $5.730 per MMBTU.