Looking to the Futures
Crude Climbs as Peace Hopes Fade
Crude oil futures (/CLF26) rallied to end the week after hopes for a peace agreement between Ukraine and Russia diminished, following unsuccessful negotiations involving both nations and the United States.
In addition, in its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles increased by 600,000 barrels during the week ending November 28. This was contrary to expectations for an 800,000 barrel draw.
Oil inventories, excluding the Strategic Petroleum Reserve, stood at 427.5 million barrels, 3% below the five-year average.
U.S. oil production increased by 1,000 barrels per day last week and averaged 13.815 million barrels per day. This was 302,000 barrels per day higher than one year ago.
On the oil product side, distillate inventories increased by 2.1-million barrels, which was above expectations for a 700,000 barrel build. Distillate inventories are now 7% below the five-year average for this time of year.
Gasoline inventories increased by 4.5 million barrels, which was above expectations for a 1.5-million barrel build. These stockpiles are now 2% below the five-year average.
EIA said gasoline production increased from the previous week and averaged 9.8-million barrels per day. Distillate production also rose last week, averaging 5.1-million barrels per day.
The agency also reported that U.S. ethanol production rose last week, averaging 1.126 million barrels per day. Expectations were for 1.12 million barrels per day.
U.S. ethanol inventories rose to 22.5 million barrels last week. Traders were expecting inventories of 22.6 million barrels.
Digging further into the EIA report, refinery utilization increased by 1.8 percentage point to 94.1% last week. Expectations were for an increase to 93.5%. U.S. gasoline demand declined by 400,000 barrels per day to 8,326 million barrels per day. Distillate demand rose last week, increasing by 68,000 barrels per day to 3.430 million barrels per day.
Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, fell by 500,000 barrels last week at 21.3 million barrels.
The U.S. crude oil rig count declined by 12 and now total 407 rigs during the week ending November 28. That is down 14.7% 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® (+0.11%), the Nasdaq-100® (+0.22%), the Russell 2000® (+0.48%), and Dow Jones Industrial Average® (+0.04%) all positive.
In Asia, major indexes closed mixed, with the Shanghai (+0.54%) and the Nikkei (+0.18%) higher, but the Hang Seng (–1.23%) lower.
European trading saw the DAX (+0.22%) higher, but the CAC (–0.22%), and the FTSE (–0.04%) markets move lower by midday.
Futures on the move
Natural gas futures (/NGF26) ended Friday’s trading session in the green (+4.46%) with the January futures trading at over five month highs.
The National Weather Service Climate Prediction Center is forecasting below normal temperatures from December 11th to December 17th for most of the upper Midwest to the Atlantic Ocean. Above normal temperatures are expected for the West Coast, Southwest, and South Central portions of the U.S. during this period.
In addition, the U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories declined by 12 billion cubic feet (Bcf) during the week ending November 28. This was below market expectations of an 18 Bcf draw. U.S. gas inventories are currently 5.1% above the 5-year average and –0.5% below last year.
Canadian dollar futures (/6CZ25) closed higher on Friday (+0.81%) with the lead month December contract trading at over one-month highs. Canada’s unemployment rate declined to 6.5% in November versus 6.9% the previous month. November’s unemployment rate was the lowest in 16 months, and contrary to expectation for a rise to 7%. Job creation was focused on part-time employment, which rose by 63,000 jobs in November. Full-time employment declined by 9,400 jobs last month.
10-year Treasury futures (/ZNH26) closed lower on Friday (–0.18%), with the lead month March contract trading at two week lows. U.S. Treasuries have come under some pressure from a spillover of higher Japanese Government Bond (JGB) yields. The prospects of the Bank of Japan raising rates at its December meeting have sent 10-year JGB prices to 18-year lows.
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 November (interest rates)
Today’s trading events
First Notice Day: December Live Cattle
Last Trading Day-Options: December Crude Oil
Treasury auctions
3-and 6-month T-bills and 3-year Notes
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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