PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
The complex saw see-saw trade about the unchanged mark for a second session today, as stock market indexes did the same. Products strengthened for a fifth session, but crude futures edged down after four sessions higher. Both movements in the US dollar index and geopolitical news were supportive. Reuters reports that Washington is considering cracking down on Chinese imports of Iranian crude oil, should Iran not prove serious in returning to the nuclear agreement (Joint Comprehensive Plan of Action). Also supportive, the US dollar had depreciated by 0.35% against a basket of currencies as of this writing. European shares closed mixed. The CAC 40 added 0.15%, while the FTSE 100 was little changed (-0.03%), but the DAX fell 0.32% following a disappointing Ifo Survey of the German business climate. US stock market indexes were flat to slightly higher as of this writing, with the Nasdaq steady and gains of under 0.1% in both the Dow and S&P 500. Disappointing new home sales figures for June were likely keeping a lid on the price action. Rather than accelerating to an annualized pace of 800,000, sales fell to a 676,000 pace. Additionally, the May sales pace was revised down to 724,000.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures saw further modest strength today, extending their rally to a seventh consecutive session, despite neutral to unsupportive developments. The Global Forecast System trimmed its two-week CDD forecast by 1 to 246 - although this is still elevated compared to last year's 213 CDDs and also the 30-year average of 202. Refinitiv analysts maintained their total US demand forecast for this week of 95.5bcf/d, but raised their total supply forecast marginally, by 0.1 to 98.6bcf/d. Analysts see demand weakened by 1.5 to 94.0bcf/d next week, while supply dips back down to 98.5bcf/d, implying larger injections of 4.5bcf/d. The nuclear power outage rate held steady at 5% today, matching the five-year average - but below last year's 9% outage rate. In the cash market, next-day natural gas prices strengthened. Henry Hub prices rose 9 cents to $4.11/mmBtu, Transco Zone 6 prices in New York jumped 41 cents higher to $3.55/mmBtu, and Algonquin citygate prices climbed 39 cents higher to $3.50/mmBtu. The National Hurricane Center is tracking a disturbance located east of Jacksonville, FL, but grants it a low chance of 30% for tropical cyclone formation over the next two days.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
NYMEX HO futures climbed 0.8% higher today, consistent with our directional bias and with bulls taking out nearby $2.1415 resistance in the process. There was average volume behind today's move, but we saw a lower low to go along with today's higher high, making it an outside session, and we traded below both the 18-day ma ($2.1191) and the 50-day ma ($2.1000) intraday. Slow stochastics are entering overbought territory, but the RSI (55.6) has plenty of headroom and other indicators are either neutral or bullish. We continue to favor upside chances for now, seeing resistance at the recent $2.2101 high, followed closely by $2.2292, while we look to $2.1415 and then to the 9-day ma ($2.0973) for nearby support. RBOB futures climbed higher for a fifth consecutive session as well, adding 0.7% today - but also in an outside session with a test of nearby 18-day ma support ($2.2512) at the lows. As with HO, slow stochastics are entering overbought territory but the RSI (58.2) has lots of room over head and bulls took out $2.3000 resistance today. This becomes nearby support, followed by the 18-day ma, whereas we now look to $2.3302 (recent) high and then to $2.4483 for next resistance. WTI edged down 0.2% after four sessions higher, and with slow stochastics entering overbought territory. Today's hanging man candlestick pattern can be a bearish reversal pattern, but we'll await stronger evidence that the trend has ended. We are neutral/bullish, looking to $73.29 and then to $76.98 for resistance, while nearby support remains at the 9-day ma ($70.76, tested and held today), followed by the 50-day ma ($70.34) and then 100-day ma ($66.51). Natural gas futures climbed 1.0% higher today in an upside session, consistent with our directional bias. We continue to favor upside chances for now, but with caution - we saw a shooting star candlestick pattern printed today, overbought slow stochastics crossed for a sell signal, and the RSI (79.6) confirms overbought conditions. A consolidation or retracement is appearing increasingly likely for the coming sessions. We see nearby resistance at $4.199, followed by $4.300, whereas the 9-day ma ($3.858) and $3.512 remain nearby support.