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PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures turned back north today amid news of progress in a COVID-19 vaccine trial, gains in equities, and weakness in the US dollar. Moderna Inc said that its experimental vaccine was 94.5% effective in preventing COVID-19, becoming the second US company in a week to report results that far exceeded expectations. Also in the news, sources told Reuters that OPEC+ is leaning towards postponement of a planned January increase to oil output by at least three months. The OPEC+ Joint Ministerial Monitoring Committee is expected to meet tomorrow which is expected to recommend policy steps to OPEC+. OPEC+ is set to have a full meeting on November 30th and December 1st to decide output policy for next year. In economic news, the Empire State manufacturing index fell from 10.3 to 6.3 this month while expectations called for a rise to 13.5. Canadian manufacturing sales figures for September showed a rise of 1.5%, matching forecasts. European stock markets closed higher today with the DAX up 0.5%, the FTSE 100 and the CAC 40 both adding 1.7%. US stock market indexes were seeing gains of between 0.3% (Nasdaq) and 1.0% (Dow) as of this writing. Also supportive for crude prices, the US dollar index was down 0.2%.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures tumbled today amid a looser market balance expectation for this week and a weaker two-week heating degree day forecast. For this week, Refinitiv analysts raised their total US demand forecast by 1.0bcf/d to 104.8bcf/d and also raised their total US supply forecast by 2.5bcf/d to 98.3bcf/d, implying smaller withdrawals of 6.5bcf/d (compared to 8.0bcf/d previously). Next week supply is expected to fall to 97.5bcf/d and demand is seen dropping to 96.7bcf/d. The Global Forecast System cut its two-week heating degree day forecast from 272 to 259, which is still well below both the 30-year average of 318 and last year's 311 HDDs during the same period. The latest 1-5 day outlook (ECMWF) sees above-normal temperatures in the Midwest but below-normal temperatures on the East Coast. The 6-10 and 11-15 day forecasts are less supportive with above-normal temperatures expected across the eastern half of the country. In the cash market today, prices at the Henry Hub benchmark rose from $2.81 to $2.82/mmBtu while Transco Zone 6 prices in New York fell from $1.76 to $1.64/mmBtu, and Algonquin citygate prices remained steady at $2.03/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures rose 2.1% in an upside session today (higher high, higher low) – inconsistent with our bearish bias. Slow stochastics point lower, while candlesticks are neutral, and the RSI and the MACD are bullish. We are going to stick to our bearish stance for now, still seeing nearby support at the 100-day ma ($1.1881) and then down at the 200-day ma ($1.1601), whereas $1.3000 and $1.3054 are seen offering resistance. RBOB futures settled 1.9% higher in an upside session. Stochastics are bearish, while the RSI points higher, and the MACD and candlesticks are neutral. We are going to continue to favor downside chances, still seeing nearby resistance at $1.1973 and at the 100-day ma ($1.2035), with the 200-day ma ($1.1179) and $1.0000 expected to offer support. WTI futures added 3.0% in an upside session today with bulls taking out the 100-day ma ($40.42) and testing but failing to take out $41.49 resistance level. We continue to look there and then up at $45.27 for resistance, while the 200-day ma ($36.34) and $32.64 are seen offering support. Slow stochastics are bearish, while the RSI, the MACD, and candlesticks are neutral. We are going to remain bearish. Lastly, natural gas futures gapped lower and dropped 9.9% in a downside session (lower high, lower low). Bears took out both $2.898 and $2.762 support levels, and these now become our nearby resistance, while $2.527 and $2.403 are expected to offer support. Stochastics are bearish, while the RSI is neutral, along with the MACD. We are going to fall back on the sidelines, noting that a retracement could be possible in the next session.