Wednesday, July 1, 2020
Energy futures are trading mixed near the unchanged mark on Wednesday as market participants weigh mostly supportive economic data releases from Europe and Asia and bullish US crude oil inventory data from the American Petroleum Institute (API) against losses in European equities and US stock market index futures and strength in the US dollar. US stock market index futures are seeing losses of between 0.3% (Nasdaq) and 0.7% (Dow) this morning. Also unsupportive for crude prices, the US dollar index was up 0.1% as of this writing. Market participants awaited the US ADP employment report, the Markit Manufacturing PMI, the ISM Manufacturing Index and US construction spending for further direction.
The API reported an 8.20mb draw from US crude oil stockpiles for the week, while expectations called for a decline of 1.71mb (average of polls by Reuters and S&P Global Platts). Data for products were mixed, as API showed a larger than expected draw of 2.60mb from heating oil stocks (vs. 0.25mb), and the industry group reported a 2.50mb decrease in gasoline inventories, whereas forecasts called for a draw of 2.14mb. Cushing, OK crude oil inventories rose by 0.16mb last week, per API. The more closely watched EIA report is due at 10:30am.
Asian stock markets closed mixed overnight as the Nikkei closed 0.8% lower, while the Shanghai Composite climbed 1.4% higher, and the Hang Seng added 0.5%. The June Caixin China Manufacturing PMI came in at 51.2, up from 50.7 the prior month. Japan’s Manufacturing PMI for the same month came in at 40.1, also up from 38.4 the previous month. Lastly, the June Manufacturing PMI in India came in at 47.2, up from 30.8 the previous month.
The Eurozone Manufacturing PMI for June came in at 47.4, above expectations at 46.9. French Manufacturing PMI for the same month came in at 52.3, beating the Econoday consensus at 52.1. German Manufacturing PMI for the month came in at 45.2, also beating expectations at 44.6. Retail sales in Germany jumped 13.9% in May, well above expectations calling for a 3.6% rise. Additionally, the unemployment rate in Germany came in at 6.4%, while forecasts called for a 6.6% figure. The CIPS Manufacturing PMI in the UK came in at 50.1, matching forecasts. On the other hand, the Nationwide House Price Index (HPI) for the UK for this month fell by 1.4%, while expectations called for a 0.6% dip. Nonetheless, Germany’s DAX was trading 1.4% lower this morning, the UK’s FTSE 100 was down 1.1%, and France’s CAC 40 had lost 1.4%.
Crude futures weakened yesterday amid news that the current level of OPEC+ output cuts may not be extended beyond July and mixed trade in global equities, despite weakness in the US dollar. WTI crude fell 43 cents to settle at $39.27 a barrel, Brent crude lost 56 cents to close at $41.15, gasoline futures gained 1.60 cents to settle at $1.2001 per gallon, heating oil climbed 1.27 cents higher to $1.1781 and natural gas futures on NYMEX rose by 4.2 cents for a settlement of $1.751 per MMBTU.