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Energy Price Report For May 2020

Wednesday, May 6, 2020

Petroleum futures are trading in the red in on Wednesday amid bearish US crude inventory data from the American Petroleum Institute (API) and gains in the US dollar, despite gains in US stock market index futures. As of this writing, the US dollar was up 0.35%, which is unsupportive for crude. On the other hand, the major US stock market index futures were seeing gains of between 0.40% (Dow f) and 0.55% (Nasdaq f) this morning.

The API reported an 8.40mb build in US crude oil stockpiles for the week ended May 1, above expectations calling for a 7.43mb rise (average of polls by Reuters and S&P Global Platts). Data for products were mixed, as API showed a 6.10mb build in distillate stocks, above the 3.20mb estimate, while the industry group reported a 2.20mb draw from gasoline inventories, whereas forecasts called for a smaller draw of 0.18mb. Cushing, OK crude oil inventories rose by 2.70mb last week, per API. The more closely watched EIA report is due at 10:30am.

In the news this morning, Reuters reports that according to industry sources Iraq has yet to inform its regular oil buyers of cuts to its exports, which suggests that it is struggling to fully implement the OPEC+ output cut deal. In supportive news, Russia’s oil output fell to 8.75mb/d in the first five days of May, close to its production target of 8.5mb/d for May and June under the OPEC+ deal, according to two sources.

The Eurozone April Composite PMI came in at 13.6, just above expectations at 13.5, but down from 29.7 in March, indicating a further contraction last month. French Composite PMI came in at 11.1, shy of the Econoday consensus at 11.2, and also down from 28.9 in March. On the other hand, the Composite PMI in Germany came in at 17.4, while consensus was 17.1. Eurozone retail sales for March fell by 11.2%, which was a smaller than expected drop of 12%. German manufacturers’ orders for March were a miss as they saw a fall of 15.6%, well above expectations at -8.7%. The UK Construction PMI for last month dropped from 39.3, past consensus at 20.0, to 8.2. European stock markets were trading mixed this morning with the DAX down 0.21% and the CAC 40 losing 0.35%, while the FTSE 100 was up 0.52%. Asian stock market indexes closed mixed overnight as the Shanghai Composite gained 0.63% and the Hang Seng added 1.20%, while the Nikkei lost 2.84%. Market participants awaited the US ADP Employment Report for further direction.

The complex rallied yesterday as some countries have started reopening their economies after coronavirus lockdowns and amid gains in US and European equities, despite further strength in the US dollar index. WTI crude jumped $4.17 to settle at $24.56/bbl and Brent crude added $3.77 to close at $30.97/bbl. RBOB futures gained 7.98 cents and settled at $0.9013g and ULSD (HO) settled 9.29 cents higher at $0.896/g. According to Platts, New York Harbor ULSHO barge differentials to NYMEX strengthened by 25 points to -8.75c/g on Tuesday, while ULSD, HSHO, and LSHO differentials held steady.  May propane prices rose along with crude, per Platts, as Mt. Belvieu LST prices jumped 3.125 cents to 37.000c/g, non-LST prices added 3.500 cents to 37.750c/g, and Conway prices rose by 3.000 cents to 38.750c/g.

NYMEX natural gas futures rose 14.1 cents to settle at $2.134/mmBtu yesterday despite a looser market balance expectation for next week.

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