Wednesday, September 6, 2023
Energy prices are trading flat to lower Wednesday morning, threatening to end a long gaining streak for WTI amid losses in European shares and in US stock market index futures, despite some weakness in the US dollar index.
Energy traders are looking ahead to the Bank of Canada monetary policy announcement, Canadian merchandise trade data, the US international trade in goods and services figures, and to the final S&P Global Composite PMI for further direction. The weekly EIA inventory report will be released tomorrow, a day later due to the holiday on Monday.
Asian stock markets closed flat to higher last night as the Hang Seng edged down 0.04% while the Shanghai Composite edged up 0.12% and the Nikkei rose 0.62%. In European news, retail sales in the Eurozone fell 0.2% in July, as expected. Manufacturers’ orders in Germany dropped 11.7% lower in July, missing forecasts calling for a smaller dip of 4.0%. On the other hand, the UK Construction PMI for August came in at 50.8, just above the 50.7 consensus, but still down from 51.7 the month prior. As of this writing, the DAX was down 0.5%, the FTSE 100 had lost 0.7%, and the CAC 40 was leading the way down with a 0.8% drop. US stock market index futures were seeing losses of around 0.25% this morning. In the supportive column, the US dollar index was down 0.1%.
Crude futures continued higher yesterday with WTI rising for an eighth consecutive session amid news that both Saudi Arabia and Russia have decided to extend their oil output cuts and reduced exports, respectively, through the end of the year. Brent crude rose $1.04 to $90.04 a barrel, WTI crude added $1.14 to close at $86.69 a barrel, gasoline edged down 1.02 cents to $2.5810 per gallon, heating oil shot up 11.46 cents to settle at $3.2196 per gallon and natural gas price settled at $2.582 per MMBTU.
Tropical Storm Lee has formed in the Central Tropical Atlantic and is expected to become a major hurricane by the end of the week as it moves northwestwards towards waters north of the Leeward Islands. The National Hurricane Center is following two more disturbances, one located in the Eastern Tropical Atlantic and the other in the Northeastern Atlantic, but both are given low chances of cyclone formation over the next 48 hours.
Monday, April 3, 2023
Crude futures are extending their rally for a third session this morning. Gains are accelerating following the announcement of surprise OPEC+ output cuts. Also supportive was weakness in the dollar, strength in Asian equities and flat-to-higher trade in European stocks, whereas US stock market index futures were mixed. Market participants are looking ahead to US manufacturing and construction spending data for further direction.
Reuters reports that OPEC+ announced production cuts of 1.16mb/d, to begin in May and last through the end of the year. Saudi Arabia (500kb/d) and its Gulf allies the UAE (144kb/d), Kuwait (128kb/d), along with Iraq (211kb/d) are to account for the lion’s share of the cuts. Non-OPEC cuts are to come from Kazakhstan (78kb/d) and Oman (40kb/d). According to S&P Global, OPEC parties with output targets produced 866kb/d below target in February and non-OPEC production was 1.05mb/d below target, for combined total underproduction of 1.91mb/d. The 1.16mb/d of cuts, plus the previously announced 500kb/d in Russian cuts that began this month, would cut that gap down to 0.25mb/d.
The Hang Seng edged up 0.04%, the Nikkei gained 0.52%, and the Shanghai Composite strengthened by 0.72% last night. The Nikkei/S&P Global Manufacturing PMI for India rose from 55.3 in February to 56.4 last month, indicating expansion in the sector accelerated. In European news, the final S&P Global Manufacturing PMI for France saw a surprise downward revision to 47.3, but the German index was a surprise upward revision to 44.7, as did the index for the Eurozone as a whole, to 47.3. As of this writing, the German DAX was off 0.2%, but the French CAC 40 had gained 0.3%. The final March UK CIPS/S&P Global Manufacturing PMI saw a slight downward revision to 47.9. Nevertheless, the FTSE 100 was up by 0.6% this morning. In the US, Dow futures were up 0.3% but S&P 500 futures were down 0.1% and Nasdaq futures had lost 0.7%. Meanwhile, a 0.1% dip in the US dollar index was supportive for crude.
The complex strengthened across the board on Friday amid strength in equities, despite strength in the US dollar. Brent crude gained 50 cents, closing at $79.77 a barrel, WTI crude jumped $1.30 higher to settle at $75.67 a barrel, gasoline futures settled 3.91 cents higher at $2.7005 per gallon and heating oil jumped 5.26 cents higher to settle at $2.6763 per gallon.
Tuesday, March 1, 2022
Brent crude futures are rallying over six percent and WTI futures are up by over five percent in early morning trading as a Russian military column moved towards the Ukrainian capital, even as stocks fell and the dollar strengthened amid the same news. Economic data from Europe were lackluster, likely also weighing on equities. Energy traders are looking ahead to German retail sales and inflation, Canadian GDP, and US manufacturing sector and construction spending data for further direction.
Reuters reports that satellite images from Maxar show Russian tanks and fuel trucks bearing down on Kyiv in a column stretching for 40 miles along a highway. Russia is imposing capital controls, following investor flight amid Western sanctions. The MSCI Russia ETF fell 50% to a record low. Yesterday, the US imposed sanctions on the Russian central bank, finance ministry, and national wealth fund, blocking Americans from engaging in transactions with those entities, significantly hampering Russia’s ability to use a $630bn war chest of foreign reserves to support the ruble. Treasury also issued a general license authorizing certain energy-related transactions through June 24.
Asian shares strengthened overnight, with the Hang Seng adding 0.21%, the Shanghai Composite gaining 0.77%, and the Nikkei rallying 1.20%. The final February Nikkei Manufacturing PMI for Japan for last month came in at 52.7, indicating slow expansion in the sector, and the February China CFLP and Caixin Manufacturing PMI both beat expectations by coming in at 50.2 and 50.4, respectively – just above breakeven. European shares were falling once again today, with the FTSE 100 down 1.1% and sell-offs of 2.7% in the DAX and 2.9% in the CAC 40. The final Markit manufacturing PMI for Germany saw a surprise downward revision from the flash estimate to 58.4 this month, as did the French index down to 57.2, and the index for the Eurozone as a whole (to 58.2). The final CIPS/Markit Manufacturing PMI for the UK, on the other hand, came in at 58.0 – a surprise upward revision from the flash estimate.
Energy prices rallied to gains of between 2.6% (gasoline) and 5.8% (heating oil) yesterday amid the exclusion of some Russian banks from the SWIFT banking communications system and a $15/bbl upward revision to Goldman Sachs’ near-term Brent price forecast. Brent crude closed $3.46 higher at $101.39 a barrel, WTI crude settled $4.13 stronger at $95.72, gasoline futures gained 6.97 cents, settling at $2.7970 per gallon well behind a 16.39-cent rally in heating oil, which settled at $3.0134 per gallon. Natural gas futures slipped 1.5% lower yesterday with unsupportive shifts to the temperature and US market balance outlook, despite concern over Russian gas supplies to Europe.
The latest 1-5 day ECMWF outlook sees mostly above-normal temperatures across the country, save for parts of the Northeast where below-normal temperature are expected. The 6-10 day outlook sees above-normal temperatures across the eastern third of the country, but below-normal temperatures elsewhere.
Monday, January 3, 2022
Energy futures are trading flat to lower on Monday despite gains in US stock market index futures and in European shares, as well as weakness in the US dollar index. Market participants are looking ahead to the final US Markit Manufacturing PMI and construction spending figures for further direction.
Libyan National Oil Corporation stated that the country’s output will be cut by 0.2mb/d for a week due to maintenance on a main pipeline between the Samah and Dahra fields. Also in the news, Reuters reported that OPEC+ is likely to stick to its existing plan of 0.4mb/d output increases at tomorrow’s meeting, after the Joint Technical Committee said that the impact of the Omicron variant is expected to be mild and short-lived.
The Hang Seng closed 0.53% lower overnight, while the Tokyo Stock Exchange and the Shanghai Stock Exchange were closed for a holiday. The Markit Manufacturing PMI in India fell from 57.6 to 55.5 in December, indicating the country’s economic expansion slowed. In European news, the final Markit Eurozone Manufacturing PMI came in at 58.0, matching expectations. The index for Germany missed forecasts by coming in at 57.4 (vs 57.9), while the index for France came in at 55.6, above the Econoday consensus at 54.9. As of this writing, the DAX was up 1.07% and the CAC 40 had added 1.21%. The London Stock Exchange is closed. US stock market index futures were also seeing gains this morning of between 0.4% (Dow f) and 0.7% (Nasdaq f). Also supportive for crude oil prices, the US dollar index was down 0.15%.
Energy futures lost ground on Friday after a seven-session rally. Brent crude fell $1.75 to $77.78 a barrel, WTI crude lost $1.78 to settle at $75.21, gasoline futures dropped 6.83 cents lower to settle at $2.2285 per gallon, heating oil settled 6.58 cents lower at $2.3301 and natural gas futures rose 16.9 cents to settle at $3.730 per MMBTU.
The latest 1-5 day forecast (EC) calls for below-normal temperatures across the majority of the country, save for some parts of New England. The 6-10 day forecast is also supportive with below-normal temperatures seen across the eastern half of the country.
Wednesday, December 1, 2021
Energy futures are rebounding on Wednesday amid gains in European shares and in US stock market index futures, despite unsupportive US crude oil inventory data from the American Petroleum Institute (API). Market participants awaited US economic data in the form of the ADP Employment Report, the Markit Manufacturing PMI, the ISM Manufacturing Index, construction spending, and the weekly EIA inventory report for further direction. OPEC is expected to meet today and the OPEC+ meeting is scheduled for tomorrow.
The API reported a 0.75mb draw from US crude oil stockpiles for the week ended November 26, while expectations called for a larger draw of 1.97mb (average of polls by Reuters and S&P Global Platts). Data for distillates were neutral as API showed an increase of 0.79mb in distillate stocks, in line with the 0.73mb expectation. Inventory figures for gasoline were bearish as the agency reported a larger-than-expected build of 2.20mb in gasoline stockpiles (vs. 0.46mb).
The Japanese Jibun Bank Manufacturing PMI came in at 54.5 for November, up from 54.2 in October and indicating growth in the country’s manufacturing sector accelerated. On the other hand, the Chinese Caixin Manufacturing PMI came in at 49.9 for the same month, in contractionary territory, down from 50.6 the month prior and below expectations calling for no change. The Shanghai Composite and the Nikkei closed 0.4% higher overnight and the Hang Seng added 0.8%. The Markit Manufacturing PMI for India came in at 57.6 in November, up from 55.9 in October.
In European news, the final Markit Manufacturing PMI for the Eurozone came in at 58.4, just below consensus at 58.6. The index for Germany also missed expectations by coming in at 57.4 (vs. 57.6), while the French PMI came in at 55.9, above forecasts at 54.6. Retail sales in Germany fell 0.3% in October, missing the Econoday consensus calling for a 1.0% rise. The CAC 40 was up 1.7% this morning and the DAX had added 1.8%. In UK news, the final CIPS/Markit Manufacturing PMI for last month came in at 58.1, just shy of the 58.2 consensus. The FTSE 100 was trading 1.3% higher as of this writing. US stock market index futures were seeing gains of between 0.9% (Dow f) and 1.3% (Nasdaq f). The US dollar index was steady.
Energy futures fell sharply yesterday amid losses in global shares and news that Moderna’s CEO stated that current COVID-19 vaccines might not be as effective against the Omicron variant of coronavirus. WTI crude lost $3.77 to settle at $66.18 b barrel, Brent crude fell $2.87 to close at $70.57, gasoline futures dropped 9.70 cents lower to settle at $1.9801 per gallon and natural gas futures fell 28.7 cents to settle at $4.567 per MMBTU.
The latest 1-5 day forecast calls for well-above-normal temperatures across the majority of the country, save for the Northeast. The 6-10 day outlook is similar with below-normal temperatures expected to persist in the Northeast, while near- to above-normal temperatures are seen in the Midwest.