PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Crude oil and refined products futures continued lower for a second session today amid bearish US crude oil inventory data, despite strength in equities and slight weakness in the US dollar. The EIA reported a small, surprise build in commercial crude stocks for the week ended April 16, against expectations for a 3.5mb draw. Data from EIA were fairly neutral for distillates, gasoline, and propane. See our DOE Report for details. European shares strengthened today, with the DAX adding 0.44%, the FTSE 100 gaining 0.52%, and the CAC 40 strengthening 0.74%. The major US stock market indexes were seeing similar gains as of this writing, with the Dow and Nasdaq both up 0.7% and the S&P 500 trading 0.6% higher. Also supportive for crude, the US dollar index was down 0.11%. It was a quiet day on the economic calendar. In supply-side news, Reuters reports that Russian Energy Minister Alexander Novak indicates that next week's OPEC+ meeting is likely to be largely technical, unlikely to bring about any major policy changes. Two OPEC+ sources said they did not expect any changes, and that the meeting would be "just monitoring the market."
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX weakened some today, their second session lower, amid a downgrade to the heating degree day forecast, despite a tighter US market balance picture for next week. The Global Forecast System trimmed its two-week heating degree day outlook by 11 to 122, which is below last year's 129 HDDs during the same period - but matches the 30-year average. The latest 1-5 day outlook based on the European model continues to call for below-normal temperatures across most of the eastern two-thirds of the country, particularly west and south of the Great Lakes. Next-day cash natural gas prices strengthened, with Henry Hub up one cent to $2.76/mmBtu, Transco Zone 6 (New York) up 18 cents to $2.50/mmBtu, and Algonquin citygate prices gaining 16 cents to hit $2.60/mmBtu. Looking further out, the 6-10 day EC outlook is less supportive, with near to and mostly above-normal temperatures expected across much of the country. Refinitiv analysts cut their total US demand forecast for next week by 0.4 to 88.8bcf/d, but also cut their supply forecast - by 0.8 to 96.7bcf/d, implying smaller injections into storage of 7.9bcf/d (8.3bcf/d previously). The EIA is due to release its storage report for the week ended April 16 tomorrow morning, and poll of analysts conducted by Reuters calls for a 53bcf injection. This would top last year's 47bcf rise in storage levels, and also the 37bcf five-year average.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
We abandoned our bullish stance yesterday and ULSD futures fell 1.4% in a low-volume downside session today. Slow stochastics, the RSI, and candlesticks are all bearish now, while the MACD is still bullish. We are going to take a neutral/bearish stance now, still seeing nearby support at the 50-day ma ($1.8438 – tested today) and then down at $1.8330, while $1.9000 and $1.9695 are expected to offer resistance. RBOB futures gapped lower and lost 1.7% in a downside session today with bears taking out the 9-day ma ($2.0091) and the 18-day ma ($1.9916) along the way. Slow stochastics, the RSI, and candlesticks all point lower, while the MACD is neutral now, so we are also going to take a neutral/bearish bias here as well. Nearby support is now seen at the 50-day ma ($1.9467) and then at $1.9000, while the 18-day ma and $2.1108 are seen offering resistance. Similar to products, WTI lost 2.1% in a downside session, taking out the 9-day ma ($61.80) and the 50-day ma ($61.53). Again, we are going to take a neutral/bearish stance, seeing nearby support at $57.21 and then down at $52.17, while the 9-day ma and $63.75 are our nearby resistance levels. Lastly, NYMEX natural gas futures settled 1.3% lower in a downside session with bears taking out the 50-day ma ($2.701). We are going to fall back on the sidelines now, still seeing nearby support at the 200-day ma ($2.550) and then at $2.403, whereas $2.758 and $2.898 remain our nearby resistance levels. Slow stochastics crossed for a sell signal in overbought territory and the RSI is bearish now, while the MACD is neutral.