Monday, April 1, 2019
Crude oil and refined products are strengthening on Monday, with crack spreads narrowing, amid indications of reduced OPEC output in March and news that a production cut at a 264,000 barrel a day refinery in Houston will likely be in place for this week.
A Reuters survey indicated that OPEC production fell to the lowest level since February 2015. This increased the OPEC+ output agreement compliance rate of 11 OPEC members to 135%, up from 101%. The Iraqi Oil Ministry said that the country exported 3.38 million barrel per day last month, down from 3.62 in February, pointing to loading interruptions due to bad weather.
European and Asian stocks are trading stronger this morning following neutral to encouraging economic data released over the weekend for both Europe and Asia. The Chinese CFLP Manufacturing PMI beat expectations last month, rising to 50.5 from an upwardly revised 49.8 in February (indicating that the sector was in expansionary territory again after contracting in the previous three months). The Japanese manufacturing PMI for March was upwardly revised to 49.2 (second month in contractionary territory). In Europe, manufacturing PMI indexes for the Eurozone, Germany, and France fell shy of expectations last month. However, the CIPS Manufacturing Index for the UK shot up to 55.1, topping the Econoday forecast. The unemployment rate in the Eurozone stayed unchanged in March, at 7.8%, as predicted. Inflationary pressures in the Eurozone remained subdued, with underlying HICP for the Eurozone rising by 0.8% year-over-year, below an expected 0.9% increase. Market participants looked ahead to February retail sales, the March ISM Manufacturing Index, and February construction spending for the US for further direction.
Energy futures strengthened on Friday, amid supportive oil price forecasts from Barclays, the US pressuring global oil trading houses to limit transactions with Venezuela, gains in global equities, weakness in the US dollar, and a drop of 8 in the US oil rig count, to 816. WTI crude rose 84 cents for a $60.14 a barrel settlement, Brent crude added 57 cents to close at $68.39, heating oil closed 14 points stronger at $1.9734 per gallon, gasoline strengthened 1.57 cents to settle at $1.8956, but natural gas futures edged down 5.0 cents to close at $2.662 per MMBTU.