Written on: March 1, 2023

Energy Price Report

Wednesday, March 1, 2023

Energy Trading in the Red

Energy futures are trading in the red as of this writing on Wednesday morning, amid bearish US crude oil stock data from the American Petroleum Institute (API), despite a drop in the US dollar and gains in equities.  Energy traders are awaiting US economic data in the form of the final S&P Global Manufacturing PMI, construction spending, the ISM Manufacturing Index, and the weekly EIA petroleum inventory report for further direction.

Build in US Crude Oil Stockpiles

The API reported a 6.20mb build in US crude oil stockpiles for the week, far exceeding expectations at 0.73mb (average of polls by Reuters and the Wall Street Journal).  Data for distillates were neutral as the agency reported a 0.34mb draw from distillate stockpiles, in-line with expectations calling for a 0.48mb decline. Gasoline figures were bullish as the API reported a surprise draw of 1.80mb against forecasts calling for a 0.48mb build. In other news, Reuters reported that Russian oil productions reached its pre-sanctions level last month.

Asian Markets

The Caixin China Manufacturing PMI rose from 49.2 to 51.6 last month and is back in expansionary territory. The CFLP Composite PMI for February came in at 56.4, up from 52.9 the month prior. Both the manufacturing and non-manufacturing indexes beat expectations (52.6 and 56.3 respectively). The Shanghai Composite rose 1.00% last night and the Hang Seng shot up 4.21%, while the Nikkei in Japan edged up 0.26%. In India, the S&P Global/Nikkei Manufacturing PMI for last month came in at 55.3, down slightly from 55.4 in January.

European Markets

In European news, the final S&P Global Manufacturing PMI for the Eurozone for February came in at 48.5, matching the Econoday consensus. Indexes for both Germany and France missed expectations by coming in 46.3 (vs 46.5) and 47.4 (vs 47.9), respectively. The German CPI showed prices rose 0.8% last month, just above the 0.7% consensus. In supportive news, the unemployment rate in Germany held steady at 5.5% last month, while forecasts called for an increase to 5.6%. The DAX was up 0.6% as of this writing and the CAC 40 had added 0.7%. In the UK, the final CIPS/S&P Global Manufacturing PMI for last month came in at 49.3, just above expectations at 49.2. The FTSE 100 was up 0.9%. US stock market index futures were seeing gains of around 0.2% as of this writing. Also supportive for crude oil prices, the US dollar index was down 0.7% this morning.

Petroleum Futures Flat

Petroleum futures settled flat to higher yesterday with mostly higher trade in US equities, despite losses in European shares and strength in the US dollar. Brent crude futures rose by $1.44 to close at $83.89 a barrel, WTI crude added $1.37 to settle at $77.05 a barrel, gasoline futures shot up 6.60 cents, settling at $2.4343 per gallon, heating oil edged up just 11 points, closing at $2.8209 per gallon and natural gas futures edged up 1.6 cents to settle at $2.747 per MMBTU.

Above Normal Temperatures in Northeast and Midwest

The latest 1-5 day forecast continues to see above-normal temperatures in both the Northeast and the Midwest. The 6-10 day outlook calls for mostly below-normal temperatures in both consuming regions. The 11-15 day outlook is supportive with below-normal temperatures expected across the majority of the country.