PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures saw small losses today, as strength in the US dollar index likely weighed, whereas flat to higher trade in equities may have helped limit the downside movement. Across the pond, the FTSE 100 fell 0.38% despite stronger than expected home price appreciation in the UK in March (per Halifax), but the CAC 40 added 0.06% and the DAX gained 0.21%. These gains came despite weaker than expected German and French industrial production figures for February. In positive news, Italian retail sales saw a much sharper than expected jump of 6.6% in February. Economic data from our neighbors to the north were encouraging, as Canadian employment jumped 303,100 last month - well above expectations at 80,000 and cutting the unemployment rate down to 7.5%, well below expectations at 8.0%. In US news, the PPI-FD rose 1.0% last month, above the 0.5% consensus, and if we exclude volatile food, energy, and trade services, the index rose 3.1% year-on-year. US stock market indexes were seeing modest strength as of this writing, with the Nasdaq up 0.1% and the S&P 500 and Dow both up 0.3%. The US dollar index was off of earlier highs and up 0.10%. In supply-side news, Baker Hughes reported no change in the US oil rig count this week, holding at 337 (down 167 year-on-year).
NATURAL GAS | WEATHER | INVENTORIES
NYMEX natural gas futures were little changed today, settling slightly stronger. The Global Forecast System's two-week HDD forecast was revised up by 1 to 139, still well below the 205 HDDs seen last year and also below the 30-year average for the period of 168. The latest 1-5 day ECMWF outlook is more supportive for the Midwest, where mixed temperatures are expected, but temperatures on the East Coast are still expected to average well above normal. Cash natural gas prices on the East Coast fell, with Transco Zone 6 prices in New York down 2 cents to $1.82/mmBtu and Algonquin citygate prices dropping 13 cents to $1.82/mmBtu. Henry Hub prices strengthened 4 cents to $2.47/mmBtu. The 6-10day ECMWF outlook calls for below-normal temperatures in the Midwest and near to above-normal temperatures along the East Coast. Refinitiv analysts revised up their total US demand forecast for next week by 1.6 to 89.2bcf/d, while trimming their supply forecast by 0.6 to 98.2bcf/d, implying smaller injections of 9.0bcf/d (versus 11.2bcf/d previously). In unsupportive supply-side news today, Baker Hughes reported a rise of 2 in the US natural gas rig count this week, putting it at 93. In other news, Colorado State University expects the 2021 Atlantic Hurricane Season to be the sixth consecutive season to bring above-normal hurricane activity. It expects to see 17 named storms, of which 8 will be hurricanes, with 4 of those being major hurricanes.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures have been sideways and under $1.8330 (23.6% Great Recession) for 13 sessions now. Over the past five, we see a bit of a wedge pattern developing with narrowing daily ranges, indicating a breakout in one direction or another may be increasingly likely. For now, however, we remain neutral, seeing resistance at the 50-day ma ($1.8127, taken out today) and then up at the aforementioned $1.8330, whereas $1.7295 (recent low) and then $1.6553 (23.6% pandemic recovery) are seen offering nearby support. RBOB futures gapped slightly higher overnight, but closed just 0.1% higher, consistent with our neutral view. Slow stochastics were bearing and look to be crossing and becoming neutral, joining the RSI, MACD, and candlesticks (in reading neutral). We continue to look to the 18-day ma ($1.9742) and $2.1108 for nearby resistance, while the 50-day ma ($1.8840) and then $1.7475 are expected to offer support. WTI futures edged down 0.5% today, and here we see a wedge pattern developing as well, centered around $59.52 (23.6% Great Recession). We remain neutral, seeing resistance at the 9-day ma ($59.94) and then up at $63.75, while $57.21 (38.2% 2014-2016) and then the 100-day ma ($54.13) are seen offering support. NYMEX natural gas futures edged up 0.2% in an upside session, consistent with our neutral view. Slow stochastics crossed for a buy signal just north of oversold territory, but the RSI, MACD, candlesticks, and major averages are all neutral. We see nearby resistance at $2.758 and $2.898, with 200-day ma ($2.509, held at the lows today) and then $2.403 support.