PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
The complex closed in the black today amid gains in global equities, despite strength in the US dollar. An OPEC+ Joint Technical Committee (JTC) meeting was held today and the committee made no changes to its global demand forecast and made no recommendation on policy. OPEC+ is expected to meet on July 1. In European news, the European Commission Economic Sentiment Index for June came in at 117.9, up from 114.5 and beating consensus at 116.5. The German Consumer Price Index rose 0.4% in June, matching expectations. The DAX added 0.9%, while the CAC 40 edged up 0.1% and the FTSE 100 rose 0.2%. In US economic news, the S&P CoreLogic Case-Shiller Home Price Index rose 1.6% in April, above expectations at 1.2%. Also supportive, the Conference Board's Consumer Confidence Index rose from an upwardly-revised 120.0 to 127.3 this month, while forecasts called for a 119.0 figure. As of this writing, US stock market indexes were seeing gains of between 0.1% (S&P 500, Dow) and 0.2% (Nasdaq). The US dollar index was up 0.2%, which is unsupportive for crude prices.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures continued higher today despite a weaker two-week cooling degree day forecast and a looser US market balance expectation for next week. The Global Forecast System cut its cooling degree day forecast by 4 to 225 for the next two weeks, which is still above both the 30-year average of 192 CDDs and last year’s 219 cooling degree days over the same period. Refinitiv analysts now see total US supply of 98.5bcf/d outpacing US demand at 90.9bcf/d next week, implying larger injections of 7.6bcf/d (compared to yesterday’s forecast at 7.2bcf/d). Next-day natural gas prices strengthened today as prices at the Henry Hub benchmark rose by 22 cents to $3.62/mmBtu, Transco Zone 6 prices in New York jumped 78 cents higher to $3.92/mmBtu and Algonquin citygate prices added 87 cents to $4.77/mmBtu. The nuclear power outage rate remained steady at 4% today, which is in line with both last year's outage rate and the five-year average rate. The National Hurricane Center is tracking two disturbances in the Atlantic, one located about 850 miles east of the Lesser Antilles and the other located about 800 miles southwest of the Cabo Verde islands but gives them both low 30% and 10% chances of cyclone formation in the next 48 hours, respectively. According to a Reuters poll of analysts, estimates for the weekly EIA petroleum inventory report for the week ended June 25 call for a 4.7mb draw from US crude stocks amid a 0.5 percentage point predicted increase in the nation’s refinery utilization rate. Distillate stocks are expected to increase by 0.5mb, while gasoline stockpiles are expected to decline by 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 but in a downside session, fairly consistent with our flat-to-lower price view. We continue to expect nearby resistance at the 9-day ma ($2.1283) and then at $2.1877, and $2.0462 and $1.9695 are expected to offer support. RBOB futures saw stronger gains of 1.0% in an inside session, but we did see a lower high and we'll stick to our neutral/bearish guns. Nearby support remains at the 18-day ma ($2.2066), followed by $2.1108, with $2.2938 and $2.3500 as nearby resistance. Slow stochastics are bearish and candlesticks are trending downwards, whereas the RSI and MACD are neutral and major averages point higher. WTI edged up 0.1%, consistent with our neutral view. The move came in a downside session, with a trip below nearby 9-day ma support ($72.87) - but we settled above this average. We'll continue to keep an eye there and then down at $68.68 for support, with $74.45 (recent high) and $77.00 remain nearby resistance. We remain neutral for now. Natural gas futures trade continues to be kind to our views. We were looking for further upside and we rose 1.0% in an upside session - although we settled far off of the intraday high of $3.811 and below nearby $3.658 resistance. We continue to look to $3.658 and $3.750 overhead, while keeping an eye on $3.512 and $3.475 below. Overbought slow stochastics look set to cross for a sell signal, and the RSI is overcooked as well. However, we'll remain bullish until we see evidence that the trend has ended.