Written on: January 2, 2025
Thursday, January 2, 2025
Crude oil and refined products are looking to extend their rally to a fourth session, with gains of 1% and higher as of this writing. The gains came amid mostly higher trade in European shares and in futures for the major US stock market indexes, despite further strength in the US dollar and bearish weekly API US petroleum inventory data. Market participants looked ahead to US jobless claims, manufacturing, and construction spending data for further direction.
The American Petroleum Institute reported a smaller than predicted draw from US crude oil inventories of 1.40mb, as the average of polls conducted by Reuters and the Wall Street Journal put expectations at 2.60mb. Against expectations for little change in distillate and gasoline stock levels, API reported large builds of 5.70mb and 2.20mb, respectively. The more closely watched EIA figures are due this morning.
The Tokyo Stock Exchange was closed last night, but the Shanghai and Hong Kong exchanges were open and saw a sell-off. The Hang Seng took a 2.18% tumble, and the Shanghai Composite sold off by 2.66% following disappointing Chinese manufacturing data. The Caixin Manufacturing PMI for December saw a surprise drop from 51.5 to 50.5, rather than rising to 51.6 as predicted. The Nikkei/S&P Global India Manufacturing PMI saw a downward revision from the 57.4 flash estimate, to 56.4.
In European news this morning, the final French (41.9) and German (42.5) S&P Global Manufacturing PMI for December confirmed the flash estimate, but the index for the Eurozone as a whole saw a slight surprise downward revision to 45.1. All indicate contraction in the sector. The CIPS/S&P Global UK PMI also saw a surprise downward revision, to 47.0. The French CAC 40 had lost 0.6% as of this writing, but the German DAX was up by 0.1% and the UK FTSE 100 had added 0.4%. Futures for the major US stock market indexes were rising, with gains of between 0.7% (Dow) and 1.1% (Nasdaq). Whereas this was supportive for crude, a 0.3% rise in the US dollar index to fresh multi-year highs was unsupportive.
The complex extended gains to a third session on Tuesday, Brent crude rose by 65 cents to close at $74.64 a barrel, WTI crude settled 73 cents higher at $71.72 a barrel, gasoline futures settled higher by 2.52 cents to $2.0015 per gallon, heating oil settled 2.11 cents stronger at $2.3206 per gallon.
The 6-10 day forecast calls for mixed temperatures in the Midwest and Maine, but below-normal to well-below-normal temperatures elsewhere on the East Coast.