PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures lost ground today with losses of over three percent, after spending four sessions higher, amid news that Colonial Pipeline has resumed some operations and mixed trade in European shares, despite gains in US equities. Reuters reported that Colonial Pipeline has resumed some operations, after a six-day shutdown following a ransomware cyberattack. The company said that it will take days for service to be restored completely and that there could be interruptions along the way. According to Bloomberg, Colonial Pipeline paid a ransom of nearly $5 million in untraceable cryptocurrency to Eastern European hackers within hours after the attack. Colonial Pipeline declined to comment. In US economic news, the Producer Price Index – Final Demand (PPI-FD) rose 0.6% last month, above the 0.3% consensus, and if we exclude volatile food, energy, and trade services, the index rose 4.6% year-on-year. Weekly initial jobless claims fell from an upwardly-revised 507,000, past the 475,000 consensus, to 473,000. As of this writing, US stock market indexes were seeing gains of between 0.8% (Nasdaq) and 1.4% (Dow). European shares closed mixed today with the FTSE 100 down 0.6%, while the CAC 40 edged up 0.1% and the DAX added 0.3%. The US dollar index was trading flat as of this writing.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures saw see-saw trade near the unchanged mark today with a supportive weekly storage report from the Energy Information Administration (EIA) likely supporting, whereas a weaker two-week degree day forecast and a looser US market balance expectation for next week were unsupportive. The EIA reported a 71bcf injection into underground natural gas storage for the week ended May 7, below forecasts at 76bcf. Total storage levels rose to 2.029tcf, which is 15.7% lower than last year and 3.4% below the five-year average for the reporting week. Refinitiv analysts now see total US supply of 97.2bcf/d outpacing US demand at 80.8bcf/d next week, implying slightly larger injections of 16.4bcf/d (compared to yesterday’s forecast at 16.1bcf/d). The Global Forecast System cut its total degree day forecast by 4 to 130 for the next two weeks (36 HDDs and 94 CDDs), which is below both the 30-year average of 138 TDDs and last year’s 151 degree days over the same period. In the cash market today, prices at the Henry Hub benchmark remained steady at $2.91/mmBtu, while Transco Zone 6 prices in New York fell from $2.46 to $2.25/mmBtu and Algonquin citygate prices weakened 7 cents to $2.30/mmBtu. The National Hurricane Center expects no tropical cyclone activity in the Atlantic over the next 48 hours.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures dropped 3.3% in a downside session today with bears taking out $2.0462 and 9-day ma ($2.0087) support along the way. These are now our nearby resistance levels, while $1.9695 and the 18-day ma ($1.9530) are expected to offer support. Slow stochastics and the RSI are now bearish, while candlesticks are neutral and the MACD and moving averages are bullish. We are going to remain neutral for now. RBOB futures, where we were also neutral, lost 3.0% in a downside session. Bears took out the 9-day ma ($2.1309) and the $2.1108 support level. We now look to the 18-day ma ($2.0771) and then to the 50-day ma ($2.0333) for support, while the aforementioned $2.1108 and then $2.1904 are expected to offer resistance. Technical indicators are similar to those in ULSD, and we remain on the sidelines, awaiting further developments. Similar to products, WTI settled 3.4% lower in a downside session, taking out the 9-day ma ($65.05) and testing but failing to take out the $63.75 support level. We now see nearby resistance at the 9-day ma, followed by $66.85, while nearby support is now seen at $63.75 and then down at $57.21. Slow stochastics are neutral, and the MACD looks set to cross bearishly and become neutral, while the RSI points lower. We remain on the sidelines. Finally, natural gas futures edged up 0.1% in an upside session today – consistent with our neutral bias which we maintain. We continue to see nearby resistance at $3.171 and then at $3.316, while $2.898 and $2.758 are expected to offer support.