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PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures fell further today amid increasing Libyan oil production and a rise in the weekly US oil rig count, despite strength in US equities and weakness in the US dollar. According to a Reuters source, Libyan oil production has now reached 1.215mb/d. Baker Hughes reported a rise of 10 in the US oil rig count bringing the total to 236 - which is 438 lower than the same week last year. Also in the news, OPEC+ compliance with oil production cuts was 101% last month according to three OPEC+ sources. European shares closed mixed today with the FTSE 100 down 0.4%, while the DAX added 0.2% and the CAC 40 closed 0.3% higher. In US economic news, the Producer Price Index (PPI) rose 0.3% last month, above expectations at 0.2%. Core prices saw a 0.1% monthly increase, but this was slightly below the Econoday consensus at 0.2%. The preliminary October consumer sentiment index from the University of Michigan fell from 81.8 to 77.0, while forecasts called for a small increase to 82.0. As of this writing, US stock market index futures were seeing gains of between 0.5% (Nasdaq) and 1.2% (Dow). Also supportive for crude prices, the US dollar index was down 0.2%.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures strengthened today amid a stronger two-week heating degree day forecast, despite a looser market balance expectation for next week and a bearish weekly storage report from the Energy Information Administration (EIA). The EIA reported an 8bcf injection into underground natural gas storage for the week ended November 6, while forecasts called for a 3bcf withdrawal. Total storage levels rose to 3.927tcf, which is 5.3% higher than last year and 4.7% above the five-year average for the reporting week. Refinitiv analysts are seeing total US supply for next week at 95.8bcf/d, up 1.0bcf/d from the previous forecast. With the demand forecast revised down by 0.8bcf/d to 103.8bcf/d, smaller withdrawals of 8.0bcf/d are expected. Also unsupportive, Baker Hughes reported a rise of 2 in the US natural gas rig count this week, putting it at 73. The Global Forecast System sees 272 heating degree days over the next two weeks, up from 249 in the prior outlook, but still well below the 301-HDD 30-year average and last year's 341 HDDs during the same period. The latest 1-5 day forecast (EC) sees mixed temperatures in the Midwest, while near normal temperatures are expected in the Northeast. The 6-10 day outlook calls for below-normal temperatures on the East Coast, while above-normal temperatures are seen in the Midwest. In the cash market, benchmark Henry Hub prices rose from $2.75 to $2.81/mmBtu, Algonquin citygate prices rose from $1.55 to $2.03/mmBtu, and Transco Zone 6 pricing at the New York citygate jumped from $1.48 to $1.76/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures settled 2.4% lower in a downside session (lower high, lower low). Slow stochastics and the RSI point lower, along with candlesticks, so we are going to side with the bears now. We continue to see nearby support at the 100-day ma ($1.1874), followed by the 200-day ma ($1.1618), whereas $1.3000 and $1.3054 are seen offering resistance. RBOB futures fell 2.7% in a downside session – consistent with our bearish bias which we maintain. We settled below both the 50-day ma ($1.1558) and the 9-day ma ($1.1334), and bears tested but failed to take out the 200-day ma ($1.1195) support level. We continue to look there and then down at $1.0000 for support, while $1.1973 and the 100-day ma ($1.2040) are expected to offer nearby resistance. WTI dropped 2.4% in a downside session today with bears taking out the 100-day ma ($40.40). Slow stochastics, the RSI, and candlesticks are bearish, so we are going to take a bearish stance now, still seeing nearby resistance at $41.49 and then up at $45.27, with the 200-day ma ($36.39) and $32.64 expected to offer support. Finally, NYMEX natural gas futures settled 0.6% higher in an upside session today (higher high, higher low) – consistent with our bullish bias which we continue to maintain. We continue to see nearby resistance at $3.182 and then at $3.396, with $2.898 and $2.762 seen as nearby support levels