Written on: December 1, 2022
December 1, 2022
Energy futures are trading flat to higher as of this writing on Thursday morning, with flat to higher trade in equities, weakness in the US dollar, and China set to loosen covid measures. Market traders are looking ahead to US jobless claims, personal income and outlays, construction spending and manufacturing PMI data for further direction on a busy day on the economic calendar.
Asian shares strengthened overnight. Reuters reports that China is set to announce an easing of quarantine protocols in the coming days, following recent protests. The Caixin China Manufacturing PMI rose unexpectedly from 49.2 to 49.4 last month, closer to the 50 breakeven point, and the Shanghai Composite added 0.45%. The Hang Seng saw larger gains of 0.75%. The Jibun Bank Japan Manufacturing PMI, on the other hand, fell from 50.7 and into contractionary territory at 49.0, below expectations at 49.4. Nevertheless, the Nikkei jumped 0.92% higher. The Nikkei/S&P Global India PMI rose from 55.3 to 55.7, indicating expansion in the sector accelerated there in November.
European shares were strengthening this morning despite a surprise downward revision from the 47.3 flash estimate to 47.1 in the Eurozone Manufacturing PMI (S&P Global). The indexes for France and Germany both saw surprise downward revisions, to 48.3 and 46.2, respectively. Also unsupportive, German retail sales contracted 2.8% in October, far below consensus at -0.6%, although September sales were revised favorably. The DAX was up 0.8% as of this writing, while the CAC 40 in France had added 0.2% and the UK FTSE 100 had edged up 0.1%. In the US, Dow futures were flat and futures for both the S&P 500 and Nasdaq were up 0.1%. Also supportive for crude, the US dollar index was down 0.6% this morning.
The complex strengthened across the board on Wednesday amid bullish weekly US crude stock data from the EIA and mixed, but largely supportive US economic data releases including stronger than predicted GDP growth in the third quarter. WTI crude gained $2.35 a barrel to settle at $80.55, Brent crude closed $2.40 higher at $85.43 a barrel, gasoline futures gained 8.64 cents to settle at $2.4185 per gallon, heating oil settled 6.70 cents higher at $3.3629 per gallon and natural gas futures lost 30.5 cents yesterday, settling at $6.930 per MMBTU.
The EIA is expected to report a large withdrawal of 103bcf from storage for the week ended last Friday, compared to 54bcf last year and a 34bcf five-year average.
The latest 1-5 day outlook based on the European model calls for mostly below-normal temperatures in the Midwest and mixed temperatures on The East Coast. The 6-10 day forecast is more supportive, with below-normal temperatures expected in both the Midwest and Northeast.