PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures settled flat to lower today amid mixed trade in European and US equities, despite weakness in the US dollar. Reuters reported that Colonial Pipeline was having network issues which were preventing shippers from planning upcoming shipments of fuel. Colonial said that the disruption was caused by the company’s efforts to harden its system following the recent cyberattack. It did not say when the issue would be resolved, but the company said that it was still delivering products scheduled by shippers. The second estimate of first quarter GDP for the Eurozone showed a 0.6% contraction, as expected. The DAX edged down 0.07% and the CAC 40 closed 0.21% lower, while the FTSE 100 edged up 0.02%. In US economic news, housing starts slowed from a downwardly-revised annualized pace of 1.733m in March to 1.569m, below the 1.705m consensus. Permits accelerated from a downwardly-revised 1.755m to 1.760m, but also missed expectations at 1.780m. As of this writing, US stock market indexes were trading mixed with the S&P 500 down 0.08% and the Dow having lost 0.15%, while the Nasdaq was up 0.41%. The US dollar index was down 0.41%, which is supportive for crude oil prices.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures turned back south today amid a looser US market balance expectation for next week. Refinitiv analysts now see total US supply of 97.7bcf/d outpacing US demand at 85.2bcf/d next week, implying larger injections of 12.5bcf/d (compared to yesterday’s forecast at 11.9bcf/d). The Global Forecast System raised its cooling degree day forecast from 121 to 128 for the next two weeks, which is above both the 30-year average of 89 CDDs and last year’s 100 cooling degree days over the same period. In the cash market today, prices at the Henry Hub benchmark rose by 4 cents to $2.99/mmBtu, Transco Zone 6 prices in New York strengthened by 35 cents to $2.55/mmBtu and Algonquin citygate prices jumped from $1.85 to $2.94/mmBtu. The National Hurricane Center does not expect any Atlantic tropical cyclone activity over the next 48 hours. According to a Reuters poll of analysts, estimates for the weekly EIA petroleum inventory report for the week ended May 14 call for a 1.6mb build in US crude stocks amid a 0.7 percentage point predicted decrease in the nation’s refinery utilization rate. Distillate stocks are expected to fall by 0.4mb and gasoline stockpiles are expected to see a decrease of 0.9mb. API petroleum inventories for the same week are due this afternoon at 4:30.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures edged down 0.2% today in an average-volume outside session (higher high, lower low). Bears tried for the 9-day ma ($2.0313) at the lows, but we settled well off of those lows and above nearby $2.0462 support. We continue to look there and then at the 9-day ma for support, whereas $2.0810 and $2.1415 are our nearby resistance levels. The MACD, major averages, and ADX point higher, but other indicators are neutral and we'll remain on the sidelines for now. RBOB futures, where we were also neutral, edged up 0.1% in an upside session today. As with HO, the MACD and major averages point higher, but other indicators are neutral and we remain neutral, seeing $2.1904 and then $2.2170 resistance, with $2.1108 and 18-day ma ($2.1032) support. WTI futures saw a larger move down of 1.2% today, but there was a higher high to go along with the lower low, and we settled above 9-day ma support ($65.20). Trade remains within the $63.75 and $66.85 price channel, and we remain neutral. Nearby resistance is expected at $66.85 and then $67.98, while the 9-day ma and then $63.75 are nearby support. We sided with NYMEX NG bulls yesterday, but while futures gapped higher overnight, they then reversed course and we fell 3.1%. We'll stick to our guns for a session longer, but we might have been premature. Nearby resistance at $3.171 and then $3.316, with $2.898 and then $2.758 support