PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
The complex posted gains for a second consecutive, but thinly traded session amid strength in equities and weakness in the US dollar, despite another rise in the US oil rig count. Despite disappointing UK monthly GDP and industrial production figures, the FTSE 100 gained 1.3% today. Italian industrial production figures for May were also a miss, with a surprise contraction. The German DAX and the French CAC 40 nevertheless posted strong gains of 1.73% and 2.07%, respectively. North American economic news was more encouraging, as the Canadian labor force grew by 230,700 last month - well above consensus at 90,000 and cutting the unemployment rate by 0.4 percentage points (twice the expectation) to 7.8%. As of this writing, the Nasdaq had gained 0.8%, the S&P 500 was up 1.0%, and the Dow had rallied 1.2%. Also supportive for crude prices, the US dollar index was down for a second session, by 0.24%. On the other hand, Baker Hughes reported a rise of 2 in the US oil rig count this week, putting it at 378 - which is 197 higher than last year.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures were little changed today, with a weaker two-week CDD forecast and a rise in the US rig count, but a tightening picture of next week's US market balance. Refinitiv analysts raised their total US demand forecast for next week by 2.1 to 94.8bcf/d while cutting their supply forecast by 0.2 to 99.5bcf/d, implying 4.7bcf/d injections into storage (compared to 7.0bcf/d previously). In unsupportive news, the Global Forecast System trimmed its two-week CDD forecast by 3 to 228, which is below last year's 255 CDDs but elevated compared to the 203-CDD 30-year average. Baker Hughes reported a rise of 2 in the US natural gas rig count this week, to 99 - which is 26 higher than last year. The nuclear power outage rate held steady at 4% today, which matches last year, but is just above the 3% five-year average outage rate. Cash natural gas prices weakened. Henry Hub prices fell 10 cents to $3.56/mmBtu, New York citygate (Transco Zone 6) prices fell 13 cents to $3.12/mmBtu, and Algonquin citygate prices slipped 4 cents lower to $2.97/mmBtu. Per the National Hurricane Center, Tropical Storm Elsa is moving over southern and coastal New England and headed towards Nova Scotia. No other tropical activity is expected in the Atlantic over the next 48 hours.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures strengthened 1.6% today in an upside session, taking out nearby resistance at the 9-day ma ($2.1305), but with thin trade behind the move. Slow stochastics look set to cross in neutral territory, and the RSI and MACD are neutral as well, with an ADX that is far too weak to indicate any directional trend. While candlesticks and major averages point higher, we will stick with our neutral/bearish view given today's thin volume. We look to the 9-day ma for nearby support, followed by the 50-day ma ($2.0751), whereas nearby resistance is expected at the recent $2.2101 high, followed closely by $2.2292. RBOB futures gapped higher overnight an strengthened 1.6%, with a low near the 9-day ma ($2.2497). As with HO, indicators are either neutral or bullish, but we'll continue to favor downside chances for at least one session longer. Nearby support is expected at the 18-day ma ($2.2283), followed by the 50-day ma ($2.1751), whereas $2.3000 and $2.3302 are our nearby resistance levels. WTI jumped 2.2% higher in an upside session, taking out nearby 9-day ma resistance ($73.65). This becomes nearby support, followed by the 50-day ma ($68.90), while $73.29 and $76.98 remain nearby resistance. We continue to favor downside chances for now. Natural gas futures edged down 0.4%, but in an upside session, consistent with our neutral view. We remain neutral, looking to the 9-day ma ($3.651) and then to $3.512 for support, with $3.658 and $3.822 resistance.