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PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Crude futures extended their gains to a third consecutive session amid gains in equities and news of a possible deepening of OPEC+ output cuts, despite strength in the US dollar. Reuters reported that OPEC+ could extend its production cuts into 2021 or deepen them further if market conditions requires, according to Algeria’s energy minister. European shares closed higher today with the DAX up 0.4%, the CAC 40 adding 0.5%, and the FTSE 100 gaining 1.4%. US stock market indexes were seeing gains of between 0.2% (Dow) and 1.9% (Nasdaq), as of this writing. On the other hand, the US dollar index was up 0.3%, which is unsupportive for crude oil prices.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures strengthened further today, amid a tighter market balance forecast for next week and a stronger two-week heating degree day forecast. The Global Forecast System raised its two-week HDD forecast from 237 to 245, which is still well below both the 30-year average of 289 and last year's 341 HDDs during the same period. Also supportive, Refinitiv analysts trimmed their total US supply forecast for next week by 0.1bcf/d to 94.8bcf/d, while raising their total US demand forecast by 1.4bcf/d to 102.8bcf/d, implying larger withdrawals from storage of 8.0bcf/d, compared to 6.5bcf/d previously. In the cash market today, prices largely rose. Henry Hub prices rose from $2.63 to $2.74/mmBtu, Algonquin citygate prices rose from $0.53 to $1.08/mmBtu, and Transco Zone 6 prices in New York jumped from $0.42 to $1.15/mmBtu. The latest 1-5 day EC outlook calls for above-normal temperatures on the East Coast, while mostly below-normal temperatures are expected in the Midwest. The 6-10 day forecast sees near normal temperatures on the East Coast, while above-normal temperatures are expected in the Midwest. The EIA is due to release its weekly natural gas storage report tomorrow, for the week ended November 6, and analysts polled by Reuters see a 9bcf withdrawal being reported. This would be in contrast to the 33bcf five-year average injection and also last year's 12bcf rise in storage levels. Due to the holiday today, the EIA is also due to release petroleum inventories for the week ended November 6 tomorrow. Analysts surveyed by Reuters see a 0.9mb draw from crude stocks being reported, with the refinery utilization rate expected to fall 0.5 percentage points. Draws from product stocks are also expected, of 0.26mb from gasoline and 1.86mb from distillate stockpiles.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures gapped higher but fell 0.5% intraday in an upside session (higher high, higher low). Slow stochastics are still overbought and the RSI is neutral, while candlesticks and the MACD are bullish. We are going to stick with our bullish bias for a bit longer, seeing nearby support at the 100-day ma ($1.1866) and then down at the 200-day ma ($1.1659), while $1.3000 and $1.3054 are expected to offer resistance. RBOB futures settled 1.5% lower in an upside session – consistent with our neutral view which we maintain. We continue to see nearby resistance at $1.1973 (recent high) and then up at the 100-day ma ($1.2062), which both held up today, while the 200-day ma ($1.1230) and $1.0000 are seen offering support. WTI futures gapped higher but fell intraday, still managing to settle 0.2% higher in an upside session, which is consistent with our bullish bias. We settled just below $41.49 resistance level and we continue to look there and then up at $45.27 for resistance, while the 200-day ma ($36.50) and $32.64 are expected to offer support. Finally, natural gas futures rose 2.8% in an upside session – inconsistent with our bearish stance. Slow stochastics and the RSI point higher, along with candlesticks, while the MACD is neutral. We are going to side with the bulls now, seeing nearby resistance at $3.182 and then up at $3.396, with $2.898 and $2.762 seen as nearby support levels.