PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures rebounded today, after a two-session sell-off, amid weakness in the US dollar and bullish gasoline and crude oil inventory data from the Energy Information Administration (EIA), despite losses in global equities. The EIA reported larger than expected draws from crude and gasoline stocks for the week ended July 2, a smaller than predicted build in combined propane and propylene stock level, and a larger than expected increase in distillate inventories. See our DOE Report for more. In US news, weekly initial jobless claims rose from an upwardly-revised 371,000 to 373,000, while the Econoday consensus called for a drop to 353,000. As of this writing, US stock market indexes were seeing losses of between 0.4% (Nasdaq) and 0.8% (Dow). Trade in European shares was also unsupportive today as the FTSE 100 and the DAX closed 1.7% lower, while the CAC 40 dropped 2.0%. In supportive news, the US dollar index was down 0.25%, as of this writing.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures turned back north today amid a bullish weekly storage report from the Energy Information Administration (EIA), a stronger two-week cooling degree day forecast, and a tighter US market balance expectation for next week. The EIA reported a 16bcf injection into underground natural gas storage for the week ended July 2, well below forecasts at 34bcf. Total storage levels rose to 2.574tcf, which is 17.6% lower than last year and 6.9% below the five-year average for the reporting week. The Global Forecast System raised its cooling degree day forecast by 6 to 231 for the next two weeks, which is closer to but still well below last year’s 252 CDDs over the same period, but above the 30-year average of 202 CDDs. Refinitiv analysts now see total US supply of 99.7bcf/d outpacing US demand at 92.7bcf/d next week, implying smaller injections of 7.0bcf/d (compared to yesterday’s forecast at 10.5bcf/d). In the cash market today, prices at the Henry Hub benchmark fell by 2 cents to $3.66/mmBtu, Transco Zone 6 prices in New York dropped 54 cents to $3.25/mmBtu, and Algonquin citygate prices fell 73 cents to $3.01/mmBtu. The National Hurricane Center is tracking Tropical Storm Elsa which is currently located near North Carolina and Virginia and is expected to move northeast towards New York and the southern New England states.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures opened lower but rose intraday to settle 1.5% higher in a downside session – a possible retracement after a sell-off in the past two sessions. Slow stochastics and candlesticks are bearish, while the RSI points higher and the MACD is neutral. We are going to stick to our bearish bias for now, still seeing nearby support at the 50-day ma ($2.0707), followed by $2.0462, while the 9-day ma ($2.1292) and $2.2101 are expected to offer resistance. RBOB futures rose 2.2% in and inside session (lower high, higher low) – not so consistent with our bearish bias. Slow stochastics are bearish, while the RSI points higher, and the MACD and candlesticks are neutral. Similar to HO, this could be a retracement after two-session losses, and we are going to stick to our bearish bias for now, looking to $2.3000 and then $2.3302 for resistance, while the 50-day ma ($2.1705) and $2.1108 are expected to offer support. WTI added 1.0% but did so in a downside session – printing a hammer shaped candlestick. Slow stochastics and candlesticks are bearish, while the MACD and the RSI are neutral. We remain bearish for now, still seeing nearby support at the 50-day ma ($68.68) and then down at $66.85, while $73.29 and $76.98 are our nearby resistance levels. Finally, NYMEX natural gas futures jumped 2.6% higher in an upside session today (higher high, higher low) – not so consistent with our neutral/bearish stance. Stochastics are still bearish, while the RSI is overbought. The MACD is bullish, whereas candlesticks are neutral. We are going to fall back on the sidelines, awaiting further developments. Bulls took out the 9-day ma ($3.631) resistance level, which now becomes nearby support, followed by $3.512, while $3.658 and $3.822 (recent high) are seen offering resistance.