Tuesday, February 19, 2019
Brent crude oil and refined products futures are trading slightly weaker on Tuesday, while WTI crude futures are edging higher. Reports that Saudi Arabia plans to cut light crude oil exports to Asia next month but indications are that Iranian oil exports will be higher than previously estimated. The US dollar index is rising slightly and global equities are seeing some weakness. Market traders are looking ahead to US housing market data as well as to headlines stemming from the US-China trade talks, set to resume today in Washington.
Reuters sources say Saudi Arabia plans to cut light crude oil exports to the Asian market in March, increasing demand for Murban and Das crude in the Asian spot market, narrowing differentials for these grades. The Saudi cuts appear to be from additional volumes above contractual volumes, with Saudi Aramco expected to largely supply full contractual volumes to Asian refiners despite the OPEC+ output agreement. Saudi Arabia plans to cut output to 9.8mb/d next month, 0.5mb/d below its target under the agreement. Meanwhile, regional rival and OPEC member Iran appears to have shipped between 1.1mb/d and 1.3mb/d of crude oil for export, higher than previously estimated, according to Reuters data. February shipments are estimated at 1.1mb/d. Following the imposition of US sanctions against the Iranian oil sector, it has become harder to track Iranian oil shipments.
Asian stock markets saw seeing mixed trade and European shares were lower and the US stock market index futures were also in the red at the time of this writing. In the UK, the jobless claims rose by more than expected last month, but not enough to nudge the unemployment rate away from 4.0%, which matched expectations. In Germany, the ZEW survey for February showed analysts downgraded their views on both current economic conditions (15.0) and future expectations (-13.4) more than expected. The US dollar was appreciating slightly against a basket of currencies and traders are anticipating data on the US housing market (NAHB Housing Market Index for February) for further direction, as well as for any news from US-China trade talks set to continue in Washington today.
Petroleum futures extended their rally on Friday, amid strength in equities and optimism surrounding US-China trade negotiations, as well as the averting of another US government shutdown, with the President expected to sign a bipartisan funding bill. Brent crude gained $1.68, settling at $66.25 a barrel, WTI crude gained $1.18 to close at $55.59, gasoline shot up 6.44 cents to $1.5729 per gallon and heating oil closed 4.87 cents stronger at $2.0203 per gallon. Natural gas futures also strengthened on Friday, rising 5.2 cents to settle at $2.625 per MMBTU.