Energy Price Report for Feb 6th

Crude oil and refined products are falling slightly on Wednesday amid unsupportive inventory data reported last night by the American Petroleum Institute (API), an appreciation in the US dollar against a basket of currencies (which was up by 0.12%) and weakness in European stocks.  Asian stocks and major US equity index futures were mostly higher this morning. The Weekly Petroleum Status Report from the Energy Information Administration (EIA) is set to be released this morning.

Weekly inventory data released by the API last night were neutral to unsupportive for both crude oil and products. The institute reported larger than predicted builds of 2.50mb and 1.70mb in US crude and gasoline stockpiles for the week ended February 1, respectively, whereas analysts expected builds of 2.18mb and 1.60mb. Crude stocks at the Cushing, OK delivery hub rose by 0.89mb. Data on distillate inventories were bearish, as they saw a surprise and counter-seasonal 0.14mb build last week, while a 1.81mb withdrawal was expected.

European stocks were trading lower this morning following discouraging economic data released for Germany. Manufacturers’ orders in Germany dropped unexpectedly, by 1.6% month-over-month in December. However, the difference was partially offset by a downwardly revised 0.2% decline in November. Market participants looked ahead to November international trade data for the US for further direction. Data on US nonfarm output and labor costs for Q4 2018 are unavailable due to the partial government shutdown, and only manufacturing output data will be released.

Crude oil and refined products futures see-sawed for most of the session and then settled lower across the board yesterday, amid a stronger US dollar and unsupportive service sector data released for the US, but despite gains in US equities. Platts reported that the EIA head believes that US sanctions on Venezuelan oil exports had “modest global price impacts”, as the supply disruption was offset by oil production in the US and other countries. WTI crude lost 90 cents for a $53.66 a barrel settlement, Brent shed 53 cents and settled at $61.98, heating oil closed 99 points weaker at $1.8975 per gallon, gasoline fell 64 points to settle at $1.4259 and natural gas futures stayed mostly constant, edging up 20 points to close at $2.662 per MMBTU.

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