Looking to the Futures

Crude oil futures prices rose sharply this past week as concerns grew that the Iran conflict could escalate, reducing Middle East crude exports for the foreseeable future.

In addition, in its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles rose by 6.9-million barrels during the week ending March 20. This was well above expectations for a 500,000 barrel storage build.

Oil inventories, excluding the Strategic Petroleum Reserve, stood at 456.2 million barrels, 0.1% above the five-year average.

U.S. oil production declined by 11,000 barrels per day last week and averaged 13.657 million barrels per day. This was 83,000 barrels per day higher than one year ago.

On the oil product side, distillate inventories increased by 3-million barrels, which was contrary to expectations for a 1.3-million barrel draw. Distillate inventories are now 0.4% below the five-year average for this time of year.

Gasoline inventories declined by 2.6-million barrels, which was above expectations for a 2.1-million barrel draw. These stockpiles are now 3% above the five-year average.

EIA said gasoline production increased from the previous week and averaged 9.7-million barrels per day. Distillate production also increased last week, averaging 5-million barrels per day.

The agency also reported that U.S. ethanol production rose last week, averaging 1.116 million barrels per day. Expectations were for an increase to 1.11 million barrels per day.

U.S. ethanol inventories increased to 27.2 million barrels last week. Traders were expecting inventories of 26.8 million barrels.

Digging further into the EIA report, refinery utilization increased by 1.5 percentage points to 92.9% last week. Expectations were for an increase to 91.5%. U.S. gasoline demand rose by 196,000 barrels per day to 8.924 million barrels per day. Distillate demand declined last week, falling by 830,000 barrels per day to 3.568 million barrels per day.

Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, rose by 3.4-million barrels last week to 30.9-million barrels.

The U.S. crude oil rig count rose by two and now total 414 rigs during the reporting period ending March 20. 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 higher in the early hours with the S&P 500® (+0.50%), the Nasdaq-100® (+0.42%), the Russell 2000® (+0.58%), and Dow Jones Industrial Average® (+0.49%) all in the green. 

In Asia, major indexes closed mixed, with the Shanghai (+0.24%) higher, but the Nikkei (–2.79%) and Hang Seng (–0.81%) posting losses. 

European trading saw the DAX (+0.27%), the FTSE (+0.79%), and the CAC (+0.34%) trade higher by midday.

Natural gas futures (/NGK26) ended Friday’s trading session in the green (+3.31%) as U.S. gas storage levels fell more than expected in the prior reporting period.

The U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories saw a 54 billion cubic foot (Bcf) draw during the week ending March 20. This was above expectations for a 44 Bcf storage build. U.S. gas inventories are currently 0.8% above the 5-year average and 5.2% above last year.

In addition, the National Weather Service’s Climate Prediction Center said temperatures from April 3 to April 9 are expected to run near to above normal across most of the Lower 48 states, with below-normal readings confined to far northern Montana and North Dakota during this time period. 

Treasury bond futures (/ZBM26) closed lower on Friday (–0.44%) as the 30-year yield jumped to 4.999%, its highest level since July. Yields have moved higher globally as rate markets weigh the risk that the Iran conflict could reignite inflation, which could cause the Federal Reserve and other central banks to potentially hike interest rates in the coming months. 

Live Cattle futures (/LEM26) closed higher on Friday (+1.69%), with the lead month June futures posting a five-week high. USDA export sales showed 10,691 metric tons of beef were sold during the week ending March 19. Japan was the largest buyer at 4,800 metric tons. Cases of the New World Screwworm are rising in the Mexican state of Tamaulipas, where there are now 40 active cases reported. 

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

Dallas Fed Manufacturing Index for March (interest rate)

Construction Spending for January (interest rate)

3-and 6-month T-bills

New York Federal Reserve President John Williams is 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)
• 100 OZ Silver (/SIC)
• 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.