PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Most of the complex ended a four-session rally today, pulling back along with equities and with a continued rebound in the US dollar, on a quiet day on the newswires and on the economic calendar. Amid rising coronavirus case counts, the Shanghai Composite dropped 1.1% lower overnight, and while the Hang Seng edged up 0.1% and the Nikkei rallied 2.4%, the Asia Dow fell 0.3%. European shares also lost ground today, with the CAC 40 and DAX both dropping 0.8% and the FTSE 100 falling 1.1%. The major US stock market indexes were also in the red as of this writing, with the Dow down 0.3%, the S&P 500 having lost 0.5%, and the Nasdaq trading 0.8% weaker. Also unsupportive for oil prices, the US dollar index was up 0.4% - off of intraday highs which saw it trade at its strongest levels since December 21.
Forward Curves for ULSD RBOB NAT GAS US DISTILLATE STOCKS
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX spent the early part of the session in the red, but recovered to post modest gains despite the near-term temperature outlook for consuming regions remaining unsupportive. Although the Global Forecast System sees 445 HDDs over the next two weeks overall, up slightly from 443 in the previous forecast - this is below the 460-HDD 30-year average. The 1-5 day outlook based on the European model sees Midwestern temperatures averaging well above normal, with above-normal temperatures in the Northeast as well. The same is true for the 6-10 day outlook. The 11-15 day outlook sees above-normal temperatures on the East Coast, but has seen some supportive shifts for the western part of the country, and mixed temperatures are seen in the Midwest. Refinitiv analysts see the US market balance loosening next week compared to this week. This week, total US demand is seen averaging 129.3bcf/d, outpacing total US supply of 100.2bcf/d. Next week, demand is seen dropping 3.7bcf/d to 125.6bcf/d, while supply is seen falling by just 0.4bcf/d to 99.8bcf/d. In the cash market, benchmark Henry Hub prices fell by 4 cents to $2.77/mmBtu, but Transco Zone 6 prices in New York increased by 6 cents to $2.83/mmBtu and prices at the Algonquin Citygate jumped 50 cents higher to $3.90/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures edged down 0.4% today but in an upside session (higher high, higher low). Slow stochastics and the RSI are both overbought, but we settled well off of the lows today, and the MACD, major averages, and ADX all point higher - and we haven't seen a cross for a sell signal in the slow stochastics. We'll continue to favor the upside for the moment, but a retracement or correction could be coming sooner than later based on the the RSI and slow stochastics. We see resistance at today's $1.5865 high, followed by $1.6424, whereas the 9-day ma ($1.5167) and then the $1.4000 mark are seen offering nearby support. RBOB futures fell 1.4%, also inconsistent with our upside bias, and here we saw an inside session as we failed to match Friday's high. Overbought slow stochastics look set to cross for a sell signal and the RSI confirms overbought conditions as well. We'll fall back to the sidelines here, looking to see if bears can follow through. W see nearby support at $1.5000 and then at the 18-day ma ($1.4079), whereas $1.5495 (Friday's high) and then $1.6000 are our nearby resistance levels. WTI futures settled virtually unchanged today in an inside session (higher low, but also a lower high), with overbought slow stochastics looking set to cross for a sell signal, and with confirmation of overbought conditions from the RSI. Meanwhile, the MACD and major averages point higher. We'll stick with the bulls for a session longer, seeing resistance at the $52.75 high from Friday, followed by $55.58, whereas $50.54 and then the 9-day ma ($49.81) are our nearby support levels. Natural gas futures surprised, as we had abandoned the bears on Friday but futures continued 1.7% higher today. They did spend much of the session in the red, however. Slow stochastics remain overbought, but the RSI (57.9) cannot provide confirmation. We remain neutral, seeing $2.769 and then $2.898 resistance, with 100-day ma ($2.634) and then $2.403 support.