PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures saw losses of over one percent today amid strength in the US dollar, a Norwegian oil worker wage agreement, and mixed trade in US and European equities. Reuters reported that three Norwegian labor unions (Industri Energi, Safe, and DSO) have made a wage deal with the Norwegian Shipowners’ Association, preventing the outbreak of a strike that would have disrupted exploration. In US economic news, weekly initial jobless claims rose from 375,000 to 412,000, while the Econoday consensus called for a drop to 360,000. Also unsupportive, the Philadelphia Fed Manufacturing Index for this month came in at 30.7, below expectations at 31.0. As of this writing, the S&P 500 was up 0.1% and the Nasdaq had added 0.9%, while the Dow had lost 0.5%. European stock markets closed mixed with the DAX and the CAC 40 up 0.1% and 0.2%, respectively, whereas the FTSE 100 fell 0.4%. The US dollar index was up 0.85% as of this writing, which is unsupportive for crude oil prices.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures weakened today amid a looser US market balance expectation for next week and a weaker two-week cooling degree day forecast, despite a supportive weekly storage report from the Energy Information Administration (EIA). The EIA reported a 16bcf injection into underground natural gas storage for the week ended June 11, well below forecasts at 72bcf. Total storage levels rose to 2.427tcf, which is 15.7% lower than last year and 4.9% below the five-year average for the reporting week. Refinitiv analysts now see total US supply of 97.4bcf/d outpacing US demand at 87.8bcf/d next week, implying larger injections of 9.6bcf/d (compared to yesterday’s forecast at 8.3bcf/d). The Global Forecast System cut its cooling degree day forecast by 5 to 197 for the next two weeks, which is still well above both the 30-year average of 170 CDDs and last year's 165 CDDs over the same period. The National Hurricane Center is tracking a disturbance over the southwestern Gulf of Mexico which is expected to move northward. The NHC gives it a high 90% chance of cyclone formation in the next 48 hours. In the cash market today, prices at the Henry Hub benchmark fell by 6 cents to $3.25/mmBtu, while Transco Zone 6 prices in New York edged up 2 cents to $2.32/mmBtu and Algonquin citygate prices rose by 4 cents to $2.34/mmBtu. The nuclear power outage rate remained steady at 6% today, which is in line with the five-year average but above last year's 6% outage rate.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
We took a neutral/bearish stance yesterday and were rewarded as ULSD futures dropped 1.7% in a downside session (lower high, lower low). Bears took out the 18-day ma ($2.0920). Slow stochastics, the RSI, and candlesticks are all bearish, while the MACD is neutral. We continue to favor downside chances, still seeing nearby support at $2.0462 and then down at $1.9695, while the 9-day ma ($2.1148) and $2.1560 are seen offering resistance. RBOB futures gapped lower and fell 1.0% in a downside session – also consistent with our neutral/bearish bias. Slow stochastics look set to become oversold, while the RSI and candlesticks point lower, and the MACD is neutral. We are going to stick to our downside bias for now, looking to $2.1108 (tested today) and then down the 50-day ma ($2.1036) for support, with $2.2365 and $2.5000 expected to offer resistance. WTI, where we were neutral/bullish, lost 1.5% in a downside session today with bears testing but failing to take out the 9-day ma ($70.72). Technical indicators mostly point lower, save for the MACD which is bullish, so we are going to fall back on the sidelines now. Nearby support is seen at the 9-day ma, followed by $63.75, while $72.99 (yesterday’s high) and $73.29 are our nearby resistance levels. Finally, natural gas futures edged up 0.1% in a downside session – consistent with our flat-to-higher price view which we maintain. Slow stochastics are bearish, while the RSI and candlesticks are neutral, and the MACD is bullish. We continue to see nearby resistance at $3.396 and then up at $3.475, whereas $3.171 and $2.898 are expected to offer support.