PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Crude oil and refined products futures saw see-saw trade today, losing ground later in the session along with US equities. Across the pond, European shares settled mixed. The DAX fell 0.12% but the FTSE 100 rose 0.17% and the CAC 40 gained 0.20%. US shares were losing some ground ahead of the FOMC policy announcement, and fell further following the decision. The Fed kept its target range for interest rates unchanged, and said it will keep an accommodative monetary policy stance and continue with its asset purchase program until we seem to be reaching maximum employment and inflation expectations are once again well anchored at two percent. As of this writing, the major US stock market index futures were seeing losses of about 0.5%. The US dollar was steady against a basket of currencies. Weekly EIA inventories released this morning were bullish for crude oil and supportive for both distillates and propane, but bearish for gasoline. It should also be noted that, while US distillate stocks fell overall, there was a 1.51mb rise in East Coast (PADD 1) inventories. WTI crack spreads, especially the gasoline crack, widened today - consistent with the EIA inventory data. See our DOE report for details.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX were little changed today, with a steady cooling degree day forecast and nuclear power outage rate. The Global Forecast System sees 202 CDDs over the next two weeks, down a tick from 203 in the previous forecast but still well above the 30-year average of 168 and also last year's 165 CDDs. The nuclear power outage rate held at 6% today, which is slightly elevated compared to last year's 5% rate, but matches the five-year average. In unsupportive news, Refinitiv analysts raised their total US supply forecast for next week by 0.8 to 97.7bcf/d, while trimming their demand forecast by 0.2 to 89.4bcf/d, implying larger injections of 8.3bcf/d. In supportive news, the National Hurricane Center is tracking a disturbance in the lower Gulf of Mexico, which it gives a strong chance of 90% for tropical cyclone formation over the next 5 days. The NHC expects it move little today and tonight, but then to turn northwards - which could put it on a path towards US oil and gas infrastructure. Cash natural gas prices were mixed, with Henry Hub prices falling 5 cents to $3.31/mmBtu and Algonquin citygate prices slipping 3 cents lower to $2.30/mmBtu, but with a one-cent gain in Transco Zone prices at the New York citygate, to $2.30/mmBtu. The EIA is due to release US natural gas storage figures for the week ended June 11 tomorrow, and a Reuters poll of analysts puts expectations at a 72bcf injection, which would be smaller than both last year's 87bcf rise and also the 86bcf five-year average.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures fell 0.4% in a slight outside session (higher high, lower low) – somewhat consistent with our neutral bias. Slow stochastics and the RSI are bearish, along with candlesticks, while the MACD is neutral. We are going to take a neutral/bearish stance now, still seeing nearby support at $2.0462 and then down at $1.9695, while the 9-day ma ($2.1211) and $2.1560 are expected to offer resistance. RBOB futures lost 0.7% in a downside session – consistent with our neutral/bearish bias which we maintain. Slow stochastics, the RSI, and candlesticks are all bearish, while the MACD is neutral. We continue to see nearby support at $2.1108, followed by the 50-day ma ($2.1001), while $2.2365 and $2.5000 remain our resistance levels. WTI gapped higher but fell intraday to still settle 3 cents higher in an upside session today, which is consistent with our flat-to-higher bias. We also saw a fresh multi-year high today at $72.99, which now becomes our nearby resistance level, along with $73.29, with the 9-day ma ($70.57) and $63.75 seen offering support. We remain neutral/bullish. Lastly, NYMEX natural gas rose 0.3% in a downside session (lower high, lower low) – consistent with our neutral/bullish price view. Slow stochastics are bearish, while the RSI is neutral, and the MACD is bullish. We are going to stick to our neutral/bullish bias for now, seeing nearby resistance at $3.396 and then up at $3.475, with $3.171 and then $2.898 seen offering support.