PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures continued higher today amid gains in US and European equities, generally supportive US economic data releases, and news that Yemen’s Houthi group has launched another drone and missile attack on the Saudi Arabian city of Jazan. In US economic news, weekly initial jobless claims fell from an upwardly-revised 769,000, past the 695,000 consensus, to 576,000. The Philadelphia Fed Manufacturing Index for this month came in at 50.2, well above expectations at 43.0. Retail sales grew 9.8% last month, beating the Econoday consensus at 5.6%. The Empire State Manufacturing index came in at 26.3 this month, topping expectations at 17.0. On the other hand, industrial production rose 1.4% last month, missing forecasts calling for a 2.8% increase. The NAHB Housing Market Index came in at 83, matching expectations. As of this writing, the Dow was up 0.8%, the S&P 500 had gained 1.0%, and the Nasdaq had added 1.2%. European shares closed higher today with the DAX up 0.3%, the CAC 40 climbing 0.4% higher, and the FTSE 100 rising 0.6%. The US dollar index was steady.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures strengthened today amid a supportive weekly storage report from the Energy Information Administration (EIA) and a tighter US market balance expectation for next week, despite a weaker two-week heating degree day forecast. The EIA reported a 61bcf injection into underground natural gas storage for the week ended April 9, below forecasts at 67bcf. Total storage levels rose to 1.845tcf, which is 11.6% lower than last year and but 0.6% above the five-year average for the reporting week. Refinitiv analysts now see total US supply of 98.1bcf/d outpacing US demand at 94.9bcf/d next week, implying smaller injections of 3.2bcf/d (compared to yesterday’s forecast at 3.6bcf/d). In the cash market today, prices at the Henry Hub benchmark rose by 9 cents to $2.65/mmBtu, Transco Zone 6 prices in New York strengthened 22 cents to $2.25/mmBtu, and Algonquin citygate prices jumped 20 cents to $2.27/mmBtu. The Global Forecast System cut its heating degree day forecast for the next two weeks by 12 to 156, which is well below both last year’s 197HDDs over the same period, but above the 30-year average of 144. The latest 1-5 and 6-10 day outlooks (EC) see below-normal temperatures across the majority of the country, save for some parts of the Northeast where near-normal temperatures are expected.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures edged up 0.5% in an upside session today – consistent with our neutral/bullish bias. Slow stochastics continue to point higher, along with candlesticks, while the RSI and the MACD are neutral, but the MACD looks set to cross the zero line and become bullish. We continue to favor upside chances, still seeing nearby resistance at $1.9000 and then up at $1.9695, while $1.8330 and the 50-day ma ($1.8303) are our nearby support levels. RBOB futures added 0.8% in an upside session, which is also consistent with the neutral/bullish stance that we took yesterday. Bulls took out the $2.0360 resistance level, which now becomes nearby support, followed by the 18-day ma ($1.9735), whereas $2.1108 and $2.1700 (recent high) are expected to offer resistance. Slow stochastics, the RSI, the MACD, and candlesticks are all bullish, so we remain neutral/bullish for now. Also consistent with our directional bias, WTI futures rose 0.5% in an upside session today. Slow stochastics and candlesticks point higher, while the RSI and the MACD are neutral. We are going to maintain our neutral/bullish stance, seeing nearby resistance at $63.75 and then up at $67.98, while the 9-day ma ($60.35) and $57.21 are seen offering support. NYMEX natural gas futures settled 1.5% higher in an outside session – somewhat consistent with our neutral/bullish bias which we maintain. Bulls tested but failed to take out the 100-day ma ($2.679) at highs. We continue to see nearby resistance at $2.758 and then at $2.898, with the 200-day ma ($2.530) and $2.403 seen as nearby support levels.