PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures settled in the red today amid a rise in coronavirus cases in Asia, weakness in US and European equities, and strength in the US dollar, despite news that Libya’s National Oil Corp has declared force majeure on exports from the port of Hariga. Reuters reported that the US House Judiciary Committee has passed the so-called NOPEC bill that would allow the US Justice Department to bring anti-trust lawsuits against OPEC countries over production cuts. It is uncertain whether the full House chamber would consider the legislation. In European economic news, the Producer Price Index in Germany rose 0.9%, above the Econoday consensus at 0.5%. UK jobless claims came in at just 10,100 last month, while expectations called for a 150,000 figure. The unemployment rate remained at 7.3%, beating forecasts at 7.9%. The DAX closed 1.55% lower, the FTSE 100 fell 2.00%, and the CAC 40 dropped 2.09%. As of this writing, US stock market indexes were seeing losses of between 0.8% (Dow, S&P 500) and 1.2% (Nasdaq). Also unsupportive for crude oil prices, the US dollar index was up 0.2%.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures edged down today amid a weaker two-week heating degree day forecast, despite a tighter market balance expectation for next week. Refinitiv analysts now see total US supply of 97.1bcf/d outpacing US demand at 89.0bcf/d next week, implying smaller injections of 8.1bcf/d (compared to yesterday’s forecast at 8.3bcf/d). The Global Forecast System cut its heating degree day forecast for the next two weeks by 4 to 133, which is now closer to both the 30-year average of 126 and last year's 129 HDDs over the same period. The latest 1-5 day outlook (EC) calls for below-normal temperatures across the majority of the country with large deviations below normal temperatures seen in the central part of the country. The 6-10 day forecast is less supportive with mixed temperatures seen in both the Midwest and the Northeast. In the cash market today, prices at the Henry Hub benchmark rose by 12 cents to $2.75/mmBtu, and Transco Zone 6 prices in New York strengthened by 8 cents to $2.32/mmBtu, while Algonquin citygate prices fell from $2.70 to $2.44/mmBtu. According to a Reuters poll of analysts, estimates for the weekly EIA petroleum inventory report for the week ended April 16 call for a 2.9mb draw from US crude stocks amid a 0.7 percentage point predicted increase in the nation’s refinery utilization rate. Distillate stocks are expected to fall by 0.9mb 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 slipped 0.7% lower today, but in an outside session - we saw a lower low but also a higher high. With slow stochastics crossing for a sell signal in overbought territory, the ADX weakening to where it can no longer indicate the presence of a trend, and with all other indicators besides the MACD being neutral, we fall back to the sidelines awaiting further developments. We continue to expect resistance at $1.9000 and then $1.9695, and also continue to expect support at the 50-day ma ($1.8416), followed now by $1.8330. RBOB futures similarly fell in an outside session, although losses were larger here at 1.3%. Bears did not manage to keep the price action below the 9-day ma ($2.0060) nor nearby support at the 18-day ma ($1.9878) on a settlement basis. As with HO, overbought slow stochastics crossed for a sell signal and we fall back to neutral. After the 18-day ma, we see next support at the 50-day ma ($1.9404), whereas $2.1108 and then $2.1700 are our nearby resistance levels. WTI futures also fell in an outside session today. There was a fourth consecutive failed try at nearby $63.75 resistance (followed by $67.98), and we touched nearby support at the 9-day ma ($61.60) at the lows, settling well off of those lows and in the middle of the daily range. After the 9-day ma, we see support at $57.21. NYMEX natural gas futures gapped lower, but did test nearby $2.758 resistance at the highs - only to fall and settle in the bottom half of the daily range. Slow stochastics are overbought but there is no confirmation from the RSI (59.4). We'll continue to favor upside chances for the moment, with resistance at $2.758 and then $2.898, while the 200-day ma ($2.545) and then $2.403 remain nearby support.