Looking to the Futures

Crude oil futures (/CLG26) ended the week higher as escalating protests in Iran raise the prospects of oil supply disruptions. 

In addition, in its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles declined by 3.8-million barrels during the week ending January 2. This was contrary to expectations for a 1.1-million barrel storage build.

Oil inventories, excluding the Strategic Petroleum Reserve, stood at 419.1 million barrels, 3% below the five-year average.

U.S. oil production declined by 16,000 barrels per day last week and averaged 13.811 million barrels per day. This was 248,000 barrels per day higher than one year ago.

On the oil product side, distillate inventories increased by 5.6-million barrels, which was above expectations for a 2.2-million barrel build. Distillate inventories are now 4% below the five-year average for this time of year.

Gasoline inventories increased by 7.7 million barrels, which was above expectations for a 2.9-million barrel build. These stockpiles are now 3% above the five-year average.

EIA said gasoline production decreased from the previous week and averaged 9-million barrels per day. Distillate production rose last week, averaging 5.3-million barrels per day.

The agency also reported that U.S. ethanol production declined last week, averaging 1.098 million barrels per day. Expectations were for a decline to 1.1 million barrels per day.

U.S. ethanol inventories increased to 23.7 million barrels last week. Traders were expecting inventories of 22.6 million barrels.

Digging further into the EIA report, refinery utilization remained unchanged at 94.7% last week. Expectations were for an increase to 95.1%. U.S. gasoline demand decreased by 393,000 barrels per day to 8.170 million barrels per day. Distillate demand also declined last week, falling by 183,000 barrels per day to 3.195 million barrels per day.

Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, increased by 700,000 barrels last week to 22.8 million barrels.

The U.S. crude oil rig count declined by three and now total 409 rigs during the reporting period ending January 9. That is down 14.8% 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® (–0.63%), the Nasdaq-100® (–0.86%), the Russell 2000® (–0.35%), and Dow Jones Industrial Average® (–0.75%) all in the red. 

In Asia, major indexes closed higher, with the Shanghai (+1.09%) and the Hang Seng (+1.44%) posting gains. The Nikkei was closed for a market holiday. 

European trading saw the DAX (+0.33%) move higher but the CAC (–0.26%) and the FTSE (–0.04%) lower by midday. 

Natural gas futures (/NGH26) ended Friday’s trading session in the red (–6.53%) as traders looked past bullish natural gas usage data and focused on weather forecasts calling for warmer than normal temperatures through mid-January.

The National Weather Service Climate Prediction Center is forecasting near normal to above normal temperatures from January 15^th to January 21^st for most of the lower 48 states with the exception of the Midwest, where below normal temperatures are expected. 

In addition, the U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories declined by 119 billion cubic feet (Bcf) during the week ending January 2. This was above market expectations for a 114 Bcf draw. U.S. gas inventories are currently 1% above the 5-year average and –3.6% below last year. 

U.S. Dollar index futures (/DXH26) closed in the green on Friday (+0.20%) rising to a four-week high following what was viewed as a mixed U.S. employment report for December. U.S. payrolls rose by a weaker than expected 50,000 jobs last month, versus expectations of a 60,000 gain. However, the unemployment rate fell to 4.4% versus 4.5% in November. Adding to U.S. dollar support, was no decision announced from the Supreme Court on Friday regarding the legality of tariffs enacted by President Trump. No announcement was made when the high court will announce its opinion on this issue.   

Canadian dollar futures (/6CH26) closed lower on Friday (–0.32%), following the release of Canada’s employment report for December. Statistics Canada reported employment rose by 8,200 jobs last month, which was better than the consensus forecast of a loss of 5,000 jobs. However, the unemployment rate rose to 6.8% in December, which was much higher than forecasts for a more modest 0.1% rise to 6.6%. However, the rise in the unemployment rate was tied to more people entering the jobs market. This was supported by a rise in full time employment of 50,200 jobs last month, while part time employment fell by 42,000, showing a need for more full time workers and potentially higher wages. 

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

USDA Quarterly Grain Stocks for December (grains)
 

3-and 6-month T-bills and 3-and 10-year notes

Federal Reserve presidents John Williams (New York), Raphael Bostic (Atlanta), and Thomas Barkin (Richmond) are expected to speak today. 

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)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.