PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
The complex rebounded sharply today, with ULSD and WTI reversing much of the losses from the previous session - and with RBOB posting a net gain between the two sessions. A potential source of support was the grounding of a large vessel in the Suez Canal, halting traffic along the important waterway. According to Kpler, over 20 tankers laden with crude oil and refined products have had their route disrupted. It remains to be seen how long it will take to refloat the vessel and resume traffic. Outside of that, strength in the Dow and in the S&P 500 was supportive today, although the Nasdaq was down 0.6% as of this writing. Also unsupportive was further strength in the US dollar, which has appreciated significantly this month. Economic data from Europe today were encouraging, as the flash March Eurozone Composite PMI (52.5, well above expectations at 49.1) indicated the zone's economy returned to growth this month. Nevertheless, European shares settled mixed with the DAX down 0.45%, the CAC 40 flat, and the FTSE 100 up 0.2%.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures saw modest strength today with an upgrade to the heating degree day forecast and slightly tighter US market balance expectation for next week. Refinitiv analysts raised their total US demand forecast for next week by 1.7 to 97.5bcf/d, while trimming their supply forecast by 0.4 to 99.0bcf/d, implying smaller injections of 1.5bcf/d. The latest 1-5 day ECMWF outlook remains unsupportive, with double-digit deviations above normal temperatures seen across much of the Northeast and in states south of the Great Lakes. Next-day cash natural gas prices strengthened today, with Henry Hub prices adding one cent to reach $2.56/mmBtu, Transco Zone 6 prices in New York rising 14 cents to $2.04/mmBtu, and Algonquin citygate prices adding 7 cents to hit $2.12/mmBtu. The 6-10 day ECMWF outlook sees mixed, near-normal temperatures in the Midwest and Northeast. Consistent with this slightly supportive revision, the Global Forecast System now projects 175 HDDs over the next two weeks, up from 166 previously - but still well below last year's 224 HDDs and also the 30-year average of 233. The EIA is due to release its weekly natural gas storage report tomorrow morning, and analysts surveyed by Reuters expect to see a 25bcf withdrawal being reported for the week ended March 19. This is similar to a 26bcf decline last year, but further below the 51bcf five-year average.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures added 4.4% in a slightly upside session with bulls taking out the 50-day ma (1.7691) resistance level, which now becomes nearby support, followed by $1.7000. Nearby resistance is now seen at $1.8330 and then up at the 18-day ma ($1.8751). This could be a retracement after yesterday’s losses and we will continue to favor downside chances for now. Slow stochastics and the RSI point higher, while the MACD and candlesticks are neutral, and the ADX continues to point at a downtrend. RBOB futures jumped 4.9% in an upside session – inconsistent with our bearish bias. This could also represent a retracement after yesterday’s drop and we are going to remain bearish for a bit longer. Slow stochastics and the RSI both point higher, while candlesticks and the MACD are neutral. We continue to see nearby support at the 50-day ma ($1.7924) and then down at $1.7475, whereas the 18-day ma ($2.0189) and $2.1700 are our nearby resistance levels. Similar to products, WTI rebounded today and rallied 5.9% in an inside session. Bulls took out the $59.67 resistance level, which now becomes our nearby support level, followed by $57.21, whereas the 9-day ma ($62.44) and $63.75 are expected to offer resistance. Slow stochastics are neutral, along with candlesticks and the MACD, while the RSI points higher. We are going to stay with the bears for a bit longer, awaiting further developments. Lastly, NYMEX natural gas futures edged up 0.4% in an inside session – consistent with our neutral bias which we maintain. We continue to look to $2.758 and $2.898 for resistance, while the 200-day ma ($2.462) and $2.403 are our nearby support levels.