PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures extended their rally to a third consecutive session, led by RBOB futures following supportive weekly gasoline stock data in the weekly EIA report (especially for the East Coast). Data were more neutral for crude oil, while being unsupportive for distillates. See our DOE Report for details. Strength in petroleum futures today also came amid strength in US shares and in most European stock market indexes. The DAX slipped 0.28% lower following a miss in the most recent Ifo survey in Germany. The business climate indicator fell from 100.7 to 99.4, short of expectations at 100.4. The current conditions component was stronger than expected (101.4) but the future expectations component deteriorated more than predicted (97.5). Meanwhile, the CAC 40 in France rose 0.18% and the UK FTSE 100 climbed 0.34% higher. In US news, durable goods orders slowed 0.1% in July, better than the 0.2% predicted dip. Core capital goods orders were steady, against expectations for a 0.5% rise - but explainable by a doubling of the June core orders growth rate to 1.0%. As of this writing, the Nasdaq was up 0.1% and the S&P 500 and Dow were both up 0.3%. The US dollar index was flat.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX strengthened slightly today despite mixed developments. In supportive news, Refinitiv analysts raised their total US demand forecast for next week by 0.3 to 94.0bcf/d, while keeping their supply forecast steady at 99.9bcf/d. On the other hand, the Global Forecast System now sees 202 CDDs over the next two weeks, down from 207 previously. This is just above last year's 200 CDDS for the same period, but elevated compared to the 30-year average of 160. The nuclear power outage rate held steady at 1% today, well below last year's 7% outage rate and also below the 3% five-year average. Henry Hub natural gas prices in the cash market rose 2 cents to $3.95/mmBtu today, and Algonquin citygate prices rose by 14 cents to $4.39/mmBtu, but New York citygate prices (Transco Zone 6 ) slipped one cent lower to $3.95/mmBtu. The EIA is due to release natural gas storage figures for the week ended August 20 tomorrow, and a survey of analysts conducted by Reuters calls for a 40bcf injection. This would fall short of last year's 45bcf rise and also the 44bcf five-year average. The National Hurricane Center has upgraded chances for tropical cyclone development for a low pressure system in the southwestern Caribbean Sea to 40% over the next two days. The NHC is tracking two other disturbances in the open ocean, but gives both low chances for tropical cyclone formation over the same period.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures continued higher today and added 2.5% in an upside session (higher high, higher low) with bulls taking out the 50-day ma ($2.1037) along the way. This now becomes nearby support, followed by the 100-day ma ($2.0437), while $2.1415 and $2.2101 are expected to offer resistance. We remain bullish for now. Also consistent with our bullish bias, RBOB futures rallied 5.5% in an upside session – taking out the 18-day ma ($2.2170) and the 50-day ma ($2.2382) along the way. Slow stochastics, the RSI, and candlesticks are bullish, while the MACD is neutral. We remain bullish, noting that a retracement could be possible in the following session after a jump of this magnitude. Nearby resistance is now seen at $2.2941 (today’s high) and then up at $2.3695 (recent multi-year high), whereas the 50-day ma and the 100-day ma ($2.1672) are expected to offer support. WTI gapped higher and rose 1.2% in an upside session – also consistent with our upside bias which we maintain. Bulls took out the 100-day ma ($67.85) resistance level, which now becomes nearby support, along with the 9-day ma ($66.13), while the 50-day ma ($70.76) and then $73.29 are seen offering resistance. Lastly, natural gas futures settled flat in an outside session today (higher high, lower low). Slow stochastics are bullish, while the RSI, the MACD, and candlesticks are neutral. We are going to stick to our upside bias for a bit longer, still seeing nearby resistance at the 18-day ma ($3.970) and then up at $4.199, while the 9-day ma ($3.879) and the 50-day ma ($3.778) are our nearby support levels.