Looking to the Futures
Crude Prices Climb as Russian Oil Exports Fall
Crude oil futures ended the week in the green after cargo tracking data showed Russian oil exports fell to 3.4 million barrels per day in January, down 11.3% from December. Russian oil deliveries to India fell by 55.2% month over month in January.
In addition, in its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles declined by 3.5-million barrels during the week ending January 30. This was above expectations for a 2-million barrel storage draw.
Oil inventories, excluding the Strategic Petroleum Reserve, stood at 420.3 million barrels, 4% below the five-year average.
U.S. oil production declined by 481,000 barrels per day last week and averaged 13.215 million barrels per day. This was 263,000 barrels per day lower than one year ago.
On the oil product side, distillate inventories decreased by 5.6-barrels, which was above expectations for a 3-million barrel draw. Distillate inventories are now 2% below the five-year average for this time of year.
Gasoline inventories increased by 700,000 barrels, which was below expectations for a 1-million barrel build. These stockpiles are now 4% above the five-year average.
EIA said gasoline production decreased from the previous week and averaged 9-million barrels per day. Distillate production also declined last week, averaging 4.8-million barrels per day.
The agency also reported that U.S. ethanol production declined last week, averaging 956,000 barrels per day. Expectations were for a decline to 1-million barrels per day.
U.S. ethanol inventories declined to 25.1 million barrels last week. Traders were expecting inventories of 24.5 million barrels.
Digging further into the EIA report, refinery utilization fell by 0.4 percentage points to 90.5% last week. Expectations were for a decline to 90%. U.S. gasoline demand fell by 604,000 barrels per day to 8.153 million barrels per day. Distillate demand rose last week, rising by 242,000 barrels per day to 4.310 million barrels per day.
Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, declined by 800,000 barrels last week to 24- million barrels.
The U.S. crude oil rig count remained unchanged at 411 rigs during the reporting period ending January 30. That is down 14.2% from a year ago according to energy services firm Baker Hughes’ North American Rotary Rig Count report.
This morning, U.S. stock index futures moved lower in the early hours with the S&P 500® (–0.28%), the Nasdaq-100® (–0.50%), the Russell 2000® (–0.33%), and Dow Jones Industrial Average® (–0.14%) all in the red.
In Asia, major indexes closed higher, with the Hang Seng (+1.76%), the Shanghai (+1.41%), and Nikkei (+3.89%) posting gains.
European trading saw the CAC (+0.04%) and the DAX (+0.35%) move higher but the FTSE (–0.12%) lower by midday.
Futures on the move
Natural gas futures (/NGH26) ended Friday’s trading session in the red (–2.48%) as the recent bout of below normal temperatures appears to have ended and a new warmer phase is expected to occur over the next two weeks.
The National Weather Service Climate Prediction Center is forecasting near normal to above normal temperatures from February 12th to February 18th for most of the lower 48 states with the exception of the far Westcoast, where below normal temperatures are expected during this time period.
In addition, the U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories declined by 360 billion cubic feet (Bcf) during the week ending January 30. This was below market expectations for a 379 Bcf draw. U.S. gas inventories are currently –1.1% below the 5-year average and 1.7% above last year.
Soybean futures (/ZSH26) closed higher on Friday (+0.27%), with the lead month March contract trading at two-month highs. President Trump is attempting to raise the amount of commitments from China to purchase U.S. soybeans from 12 million metric tons to 20 million metric tons this season.
Gold futures (/GCJ26) saw prices recover on Friday (+1.85%), as buyers in Asia emerged following the steep $1,200 per ounce sell-off in gold prices the past week. Gold demand was particularly strong in China, ahead of the Lunar New Year holiday.
What else to watch today
Major economic reports, trading events, and news items that could potentially impact specific futures markets:
New York Fed Consumer Inflation Expectations for January (interest rates)
Today’s trading events
Futures first notice day: February Live Cattle
Treasury auctions
3-and 6-month T-bills
Federal Reserve speakers
Federal Reserve President Raphael Bostic (Atlanta) along with governors Stephen Miran and Christopher Waller are expected to speak today.
New Products
New futures products are available to trade with a futures-approved account on all thinkorswim platforms:
- Ripple (/XRP)
- Micro Ripple (/MXP)
- Micro Corn (/MZC)
- Micro Wheat (/MZW)
- Micro Soybean (/MZS)
- Micro Soybean Oil Futures (/MZL)
- Micro Soybean Meal Futures (/MZM)
- 1 OZ Gold (/1OZ)
- Solana (/SOL)
- Micro Solana (/MSL)
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