PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures settled in the red today amid the reopening of the Suez Canal, fresh lockdowns in Europe, losses in major US stock market indexes, and continued strength in the US dollar index. Reuters reported that Germany has extended its lockdown until April 18 and that a third of French population has entered a month-long lockdown. Lockdowns have also been tightened in Italy, Austria, Norway, and Switzerland. In supportive news, Saudi Arabia is prepared to support extending OPEC+ output cuts into June and to extend its voluntary cuts to boost prices amid a new wave of coronavirus lockdowns, according to a Reuters source. European shares closed in the black today with the FTSE 100 up 0.5%, the CAC 40 adding 1.2%, and the DAX gaining 1.3%. In US news, the S&P CoreLogic Case-Shiller Home Price Index rose 1.2% in January, matching expectations. The Conference Board's Consumer Confidence Index rose from a downwardly-revised 90.4 to 109.7 this month, beating expectations at 96.0. As of this writing, US stock market indexes were seeing losses of between 0.4% (Nasdaq, Dow) and 0.5% (S&P 500). Also unsupportive for crude oil prices, the US dollar index was up 0.4%, hitting fresh highs not seen since November.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures turned back south today amid a looser US market balance expectation for next week, a weaker two-week heating degree day forecast, and a moderating temperature outlook. The Global Forecast System cut its heating degree day forecast for the next two weeks from 181 to 173, which is further below both the 30-year average of 209 and last year's 187 HDDs over the same period. The latest 1-5 day outlook (EC) calls for above-normal temperatures in the northern part of New England, while mostly below-normal temperatures are expected in the Midwest. The 6-10 day forecast is less supportive with above-normal temperatures seen across the majority of the country with large deviations above normal temperatures seen in the Midwest. Refinitiv analysts now see total US supply of 99.0bcf/d outpacing US demand at 92.2bcf/d next week, implying larger injections of 6.8bcf/d. In the cash market today, prices at the Henry Hub benchmark rose by 6 cents to $2.58/mmBtu, Algonquin citygate prices strengthened from $1.80 to $1.94/mmBtu, and Transco Zone 6 prices in New York jumped from $1.62 to $1.93/mmBtu. According to a Reuters poll of analysts, estimates for the weekly EIA petroleum inventory report for the week ended March 26 call for a 0.1mb rise in US crude stocks despite a 1.8 percentage point predicted increase in the nation’s refinery utilization rate. Distillate stocks are expected to increase by 0.2mb and gasoline stockpiles are expected to see a build of 0.7mb. API petroleum inventories for the same week are due this afternoon at 4:30.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures shed 1.1% in a thinly-traded inside session (lower high, higher low), printing a hammer-shaped candlestick. We fall back to the sidelines given the sideways (albeit volatile) trade over the past eight sessions, with the mixed technical picture. The RSI, MACD, and candlesticks are neutral, and while slow stochastics and major averages point higher, the ADX points lower. We continue to see nearby resistance at $1.8330 and then $1.9000, whereas the 50-day ma ($1.7846) and then $1.7295 (recent low) are seen offering nearby support. RBOB futures gapped higher, but shed 0.3% today in an upside session, not inconsistent with our neutral view which we maintain. We continue to expect nearby resistance at the 18-day ma ($2.0216), followed by $2.1108, while $2.8709 (recent low) and then the 50-day ma ($1.8263) should offer nearby support. Slow stochastics and major averages point higher, whereas the MACD and RSI are neutral. We also fell to the sidelines regarding WTI yesterday, and futures fell 1.6% in an upside session. Nearby 9-day ma support ($60.38) held on a settlement basis, and we'll continue to keep an eye there and then down at $59.67, whereas $63.75 and then $67.98 (recent high) are nearby resistance. We remain neutral. Natural gas futures gapped higher with the front switch, but then slipped 1.1% lower, printing a shooting star. We remain neutral, still seeing resistance at $2.758 and then $2.898, whereas the 200-day ma ($2.478) and then $2.403 are expected to offer support.