PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures strengthened for a third consecutive session today amid gains in US shares, despite losses in European equities and strength in the US dollar. The Consumer Price Index in Germany rose 0.7% this month, above expectations at 0.5%. The DAX fell 0.90%, while the FTSE 100 and the CAC 40 edged down 0.03% and 0.07%, respectively. In US news, the first estimate of first quarter GDP showed a 6.4% increase, just below the Econoday consensus at 6.5%. The NAR Pending Home Sales Index for March saw a 1.9% rise, missing expectations at 3.8%. On the other hand, weekly initial jobless claims came in at 553,000, below the Econoday consensus at 558,000 and down from 566,000 the prior week. As of this writing, the Nasdaq was up 0.2%, while the S&P 500 and the Dow had both added 0.6%. The US dollar index was seeing modest gains of 0.08%, which is unsupportive for crude prices.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures turned back south today amid an unsupportive weekly storage report from the Energy Information Administration (EIA), despite a tighter US market balance expectation for next week. The EIA reported a 15bcf injection into underground natural gas storage for the week ended April 23, above forecasts at 11bcf. Total storage levels rose to 1.898tcf, which is 13.7% lower than last year and 2.1% below the five-year average for the reporting week. The Global Forecast System kept its total degree day forecast at 132 for the next two weeks (73 HDDs and 75 CDDs), which is below the 30-year average of 148 TDD and well below last year’s 175 degree days over the same period. The latest 1-5 day outlook (EC) sees above-normal temperatures in both the Midwest and the Northeast. The 6-10 day forecast is more supportive with mostly below-normal temperatures expected in both consuming regions. Refinitiv analysts now see total US supply of 97.7bcf/d outpacing US demand at 87.3bcf/d next week, implying smaller injections of 10.4bcf/d (compared to yesterday’s forecast at 11.1bcf/d). In the cash market today, prices at the Henry Hub benchmark rose by 7 cents to $2.98/mmBtu, while Transco Zone 6 prices in New York weakened 6 cents to $2.35/mmBtu and Algonquin citygate prices fell 5 cents to $2.45/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures rose 1.2% in an upside session – consistent with our bullish bias which we maintain. Slow stochastics, the RSI, the MACD, candlesticks and moving averages are all bullish. We continue to see nearby resistance at $1.9695 (tested but held up today) and then up at $1.9868, while $1.9000 and the 50-day ma ($1.8584) remain our nearby support levels. RBOB futures added 1.3% in an upside session – also consistent with our directional bias. Slow stochastics, the RSI, candlesticks, and the MACD all point higher. We continue to favor upside chances, seeing resistance at $2.1108 (tested today) and then up at $2.1700 (recent high), whereas the 18-day ma ($2.0055) and $1.9000 are expected to offer support. WTI, where we also favored upside chances, jumped 1.8% higher in an upside session today. Technical indicators are similar to those in ULSD and RBOB and we remain bullish. Nearby support is seen at $63.75, followed by the 9-day ma ($62.70), while $66.85 and $67.98 are our nearby resistance levels. Lastly, natural gas futures, where we were bullish, gapped higher but fell intraday to settle 1.7% lower in an upside session. Slow stochastics crossed bearishly in overbought territory and the RSI also points lower now, while the MACD and candlesticks are bullish. We are going to remain bullish for a bit longer, awaiting further developments. We continue to look to $3.171 and then $3.316 for resistance, while $2.898 (tested today) and $2.758 are expected to offer support.