PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures strengthened further today amid further weakness in the US dollar index, despite losses in US and European shares. Although the British economy opened up today with the relaxation of coronavirus measures, the FTSE 100 lost 0.15%. The German DAX fell 0.13%, and the CAC 40 in France slipped 0.28% lower. Canadian housing starts for April were a miss, slowing from an annualized pace of 334,759 to 268,631 last month, below expectations at 285,000. In US economic news, the Empire State Manufacturing Index for May was a miss, falling from 26.3 to 24.3 - below consensus at 25.0. The NAHB Housing Market Index for this month came in at 83, flat from April, and matching expectations. As of this writing, the Dow was down 0.36%, the S&P 500 had shed 0.59%, and the Nasdaq had dropped 1.08%. On the other hand, the US dollar index was down 0.14%.
NATURAL GAS | WEATHER | INVENTORIES
NYMEX natural gas futures strengthened today with a stronger cooling degree day forecast and a tighter US market balance expectation for this week. Refinitiv analysts raised their total US demand forecast for this week by 1.6bcf/d to 82.4bcf/d, while raising their supply forecast by just 0.2bcf/d to 97.3bcf/d, implying smaller injections of 14.9bcf/d. Next-day cash prices were mixed, with Henry Hub holding at $2.95 while Transco Zone 6 prices in New York rose 6 cents to $2.20/mmBtu, but Algonquin citygate prices dropped 30 cents lower to $1.85/mmBtu. The US supply-demand balance is seen tightening further next week, with demand strengthening 3.4bcf/d to average 85.8bcf/d, while supply is seen at 97.7bcf/d. Over the next two weeks, the Global Forecast System sees 121 cooling degree days, up from 100 previously, and above both last year's 100 CDDs and the 87-CDD 30-year average.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
NYMEX HO futures rose 1.2% today in an upside session, taking out nearby $2.0462 resistance with average volume behind the move. The RSI is neutral and slow stochastics remain bearish, both other indicators point higher. We'll stick to the sidelines for now, awaiting a stronger bullish case to emerge, keeping an eye on $2.0810 (recent high) and then $2.1415 for resistance. We expect nearby support at $2.0462 and then at the 9-day ma ($2.0249). RBOB futures strengthened 1.5% today in an upside session, taking out the 9-day ma ($2.1338) here as well. Slow stochastics look set to re-cross, but in neutral territory, and the RSI looks fairly neutral as well. Major averages point higher. We remain neutral for now, seeing $2.1904 and then $2.2170 resistance, with $2.1108 and then 18-day ma ($2.0928) support. Trade in WTI is similar to products, with a 1.4% rise in an upside session. Trade remains largely bound between $63.75 below and $66.85 above. We remain neutral, looking to $66.85 and then $67.98 for resistance, with 9-day ma ($65.21) and then $63.75 support. Natural gas futures had been going nowhere for twelve sessions, but perked up with a sharp gap higher over the weekend and a 5.0% gain in an upside session. We side with the bulls, but note that the RSI (75.5) is overbought, and slow stochastics (75) have limited headroom. The MACD, major averages, and definitely today's candlestick point higher. We expect resistance at $3.171 and then at $3.316, whereas $2.898 and then $2.758 are expected to offer support.