Looking to the Futures

Crude oil futures finished the week modestly higher, with prices touching their highest levels since August amid persistently elevated U.S./Iran geopolitical tensions.

In addition, in its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles declined by 9-million barrels during the week ending February 13. This was contrary to expectations for a 2.1-million barrel storage build.

Oil inventories, excluding the Strategic Petroleum Reserve, stood at 419.8 million barrels, 5% below the five-year average.

U.S. oil production increased by 22,000 barrels per day last week and averaged 13.735 million barrels per day. This was 238,000 barrels per day higher than one year ago.

On the oil product side, distillate inventories decreased by 4.6-million barrels, which was above expectations for a 1.4-million barrel draw. Distillate inventories are now 5% below the five-year average for this time of year.

Gasoline inventories declined by 3.2-million barrels, which was above expectations for a 300,000 barrel draw. These stockpiles are now 3% above the five-year average.

EIA said gasoline production increased from the previous week and averaged 9.4-million barrels per day. Distillate production also increased last week, averaging 4.9-million barrels per day.

The agency also reported that U.S. ethanol production rose last week, averaging 1.18 million barrels per day. Expectations were for an increase to 1.08 million barrels per day.

U.S. ethanol inventories rose to 25.6 million barrels last week. Traders were expecting inventories of 25.5 million barrels.

Digging further into the EIA report, refinery utilization rose by 1.6 percentage points to 91% last week. Expectations were for an increase to 90.6%. U.S. gasoline demand rose by 448,000 barrels per day to 8.749 million barrels per day. Distillate demand also rose last week, increasing by 304,000 barrels per day to 4.753 million barrels per day.

Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, declined by 1.1-million barrels last week to 24-million barrels.

The U.S. crude oil rig count fell by three to 409 rigs during the reporting period ending February 13. That is down 15% 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® (–0.46%), the Nasdaq-100® (–0.64%), the Russell 2000® (–0.66%), and Dow Jones Industrial Average® (–0.44%) all in the red. 

In Asia, major indexes closed mixes, with the Hang Seng (+2.53%) ending higher, but the Nikkei (–1.12%) posting losses. The Shanghai was closed for a market holiday.

European trading saw the FTSE (+0.13%) and the CAC (+0.01%) move higher, but the DAX (–0.50%) lower by midday.

Natural gas futures (/NGH26) ended Friday’s trading session in the green (+1.29%) as U.S. gas inventories remain below both the one- and five-year averages for this time of year.

The U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories saw a 144 billion cubic foot (Bcf) draw during the week ending February 13. This was slightly below expectations for a 146 Bcf draw.  U.S. gas inventories are currently –5.6% below the 5-year average and –2.8% below last year. 

In addition, the National Weather Service Climate Prediction Center is forecasting above normal temperatures from February 26^th to March 4^th for most of the lower 48 states with the exception of the far Northwest portions of the country, where near normal temperatures are expected during this time period. 

30-year Treasury futures (/ZBH26) closed lower on Friday (–0.21%), after the U.S. Supreme Court struck down President Trump’s authorizing of import tariffs under the International Emergency Economic Powers Act. 

Wheat futures (/ZWK26) saw prices move to over three-month highs on Friday (+2.38%), as traders are starting to add some risk premium to futures prices due to potential production concerns tied to weather conditions in the U.S. and the Black Sea region. 

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

Chicago Fed National Activity Index for January (interest rates)

Factory Orders for December (interest rates)

Dallas Fed Manufacturing Index for February (interest rates)

First Notice Day: March Cocoa and Cotton

4-and 8-week T-bills

Federal Reserve Governor Christopher Waller 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.