Looking to the Futures
Oil Volatile as Iran Conflict Drags On
Crude oil futures prices remain elevated, as energy traders remain on edge as energy supplies out of the Middle East remain in flux.
In addition, in its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles rose by 6.2-million barrels during the week ending March 13. This was well above expectations for a 400,000 barrel storage build.
Oil inventories, excluding the Strategic Petroleum Reserve, stood at 449.3 million barrels, 1% below the five-year average.
U.S. oil production declined by 10,000 barrels per day last week and averaged 13.668 million barrels per day. This was 95,000 barrels per day higher than one year ago.
On the oil product side, distillate inventories declined by 2.5-million barrels, which was above expectations for a 1.5-million barrel draw. Distillate inventories are now 3% below the five-year average for this time of year.
Gasoline inventories declined by 5.4-million barrels, which was above expectations for a 1.6-million barrel draw. These stockpiles are now 3% above the five-year average.
EIA said gasoline production decreased from the previous week and averaged 9.4-million barrels per day. Distillate production also decreased last week, averaging 4.9 million barrels per day.
The agency also reported that U.S. ethanol production declined last week, averaging 1.093 million barrels per day. Expectations were for a decline to 1.1 million barrels per day.
U.S. ethanol inventories increased to 26.4 million barrels last week. Traders were expecting inventories of 26.3 million barrels.
Digging further into the EIA report, refinery utilization increased by 0.6 percentage points to 91.4% last week. Expectations were for an increase to 91%. U.S. gasoline demand fell by 513,000 barrels per day to 8.728 million barrels per day. Distillate demand increased last week, rising by 334,000 barrels per day to 4.399 million barrels per day.
Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, rose by 900,000 barrels last week to 27.5-million barrels.
The U.S. crude oil rig count rose by one and now total 412 rigs during the reporting period ending March 13. That is down 15.4% 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® (+1.46%), the Nasdaq-100® (+1.41%), the Russell 2000® (+2.67%), and Dow Jones Industrial Average® (+1.63%) all in the green.
In Asia, major indexes closed lower, with the Hang Seng (–3.54%), the Nikkei (–3.48%), and Shanghai (–3.63%) posting losses.
European trading saw the DAX (+1.47%) and the CAC (+1.02%) trade higher but the FTSE (–0.01%) move lower by midday.
Futures on the move
Natural gas futures (/NGK26) ended Friday’s trading session in the red (–1.98%) as U.S. gas storage levels are starting to build as the winter heating season is coming to an end.
The U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories saw a 35 billion cubic foot (Bcf) build during the week ending March 13. This was above expectations for a 31 Bcf storage build. U.S. gas inventories are currently 2.6% above the 5-year average and 10.4% above last year.
In addition, the National Weather Service’s Climate Prediction Center said temperatures from March 26 to April 1 are expected to run near to above normal across most of the Lower 48 states, with below-normal readings confined to the far Northeast.
10-year Treasury futures (/ZNM26) closed lower on Friday (–0.65%) as the 10-year yield jumped to 4.39%, its highest level since August. Yields have moved higher globally as rate markets weigh the risk that the Iran conflict could reignite inflation, which could potentially limit the Federal Reserve and other central banks’ ability to cut rates further this year.
Gold futures (/GCJ26) closed lower on Friday (–0.67%), with lead-month April futures hovering near seven-week lows. Long liquidation picked up this week, pressured by a stronger U.S. dollar. The U.S. dollar index has been trending higher since setting multi-year lows in late January. A firmer dollar is typically bearish for gold and other precious metals because it raises the cost for buyers using other currencies.
What else to watch today
Major economic reports, trading events, and news items that could potentially impact specific futures markets:
Chicago Fed National Activity Index for February (interest rate)
Construction Spending for January (interest rate)
Treasury auctions
3-and 6-month T-bills
New Products
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.