PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures turned back north today amid a bullish revision to the 2021 global oil demand forecast in the EIA's Short-Term Energy Outlook, gains in European shares, and weakness in the US dollar, despite flat-to-lower trade in US equities. The EIA released its April STEO today, in which the agency raised its 2021 global oil demand growth forecast by 180kb/d to 5.5mb/d, but cut its 2022 growth estimate by 180kb/d to 3.65mb/d. The EIA expects US crude oil production to fall by 270kb/d to 11.04mb/d this year, which is a higher drop compared to the previous estimate of 160kb/d. In US news, the Job Openings and Labor Turnover Survey (JOLTS) put openings at 7.367m in February, beating expectations at 6.850m and up from an upwardly-revised 7.099m in January. As of this writing, US stock market index futures were trading flat to lower with the Nasdaq steady, while the S&P 500 was down 0.1% and the Dow had lost 0.2%. The US dollar index was down 0.2%, which is supportive for crude oil prices. European stock markets closed in the black today with the CAC 40 up 0.5%, the DAX adding 0.7%, and the FTSE 100 closing 1.3% higher.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures fell further today amid a moderating temperature outlook, despite a tighter market balance expectation for next week. Refinitiv analysts now see total US supply of 99.1bcf/d outpacing US demand at 89.9bcf/d next week, implying smaller injections of 9.2bcf/d (compared to yesterday’s forecast at 9.6bcf/d). The Global Forecast System raised its heating degree day forecast for the next two weeks by 1 to 130, which is still well below both the 30-year average of 180 and last year's 205 HDDs over the same period. The latest 1-5 day outlook (EC) calls for well-above-normal temperatures in both the Midwest and the Northeast. The 6-10 day forecast is more supportive with mixed temperatures expected in the Midwest, while above-normal temperatures are seen on the East Coast. In the cash market today, prices at the Henry Hub benchmark fell from$2.52 to $2.43/mmBtu, Algonquin citygate prices dropped from $2.56 to $1.90/mmBtu, and Transco Zone 6 prices in New York weakened from $2.28 to $1.77/mmBtu. According to a Reuters poll of analysts, estimates for the weekly EIA petroleum inventory report for the week ended April 2 call for a 1.4mb draw from US crude stocks amid a 1.1 percentage point predicted increase in the nation’s refinery utilization rate. Distillate stocks are expected to increase by 0.5mb, while gasoline stockpiles are expected to see a draw of 0.2mb. API petroleum inventories for the same week are due this afternoon at 4:30.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures added 1.2% in a thinly-traded inside session (lower high, but also a higher low), settling in the bottom half of the range and below nearby 50-day ma resistance ($1.8001), doing nothing to push us off of the sidelines. Trade remains volatile but sideways. We continue to look to the 50-day ma and then to $1.8330 for resistance, with support expected at $1.7295 (recent low) and then at $1.6553 (23.6% retracement of the pandemic recovery). RBOB futures edged up 0.3%, printing an inverted hammer in today's inside session. Stochastics are bearish, but the RSI and MACD are neutral, as are candlesticks. We remain sidelined, looking to the 18-day ma ($2.0026, held to a test today on a settlement basis) and then to $2.1108 for resistance, whereas the 50-day ma ($1.8608) and then $1.7475 (23.6% pandemic recovery) are seen offering nearby support. WTI futures rose 1.2% today but also printed an inverted hammer, settling far off of the highs and in the bottom portion of the daily range. We settled below nearby 9-day ma ($60.16) resistance (followed by the 18-day ma ($61.59). We are in a fairly wide price channel, with prices appearing unable to veer far from $59.67 (Fibonacci retracement from the Great Recession). We continue to see support at $57.21 and then down at $55.58. As for natural gas, we were looking out for bearish confirmation today and received it, as we fell 2.2% lower in a downside session, taking out 200-day ma support ($2.496) in the process. This becomes nearby resistance, followed by $2.758, whereas we look to $2.403 and then $2.247 for next support from a bearish stance.