PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures saw see-saw trade today, as did equities, settling mixed. Strength in the US dollar index - it's fifth session higher in the last six - was unsupportive, whereas trade in US and European shares was supportive. The FTSE 100 in the UK fell 0.1% but the DAX in Germany added 0.1% and France's CAC 40 rose 0.2% today. US shares were also rising as of this writing, with the Dow up 0.2%, the S&P 500 up 0.3%, and the Nasdaq having gained 0.6%. Trade in the US dollar, however, was unsupportive as the index was up 0.2% - it's fifth session higher in the last six. It was a quiet day on the economic calendar today, outside of the US Consumer Price Index for December, which showed a 0.4% monthly rise in the price level and a 0.1% increase in core prices, both matching expectations. The EIA released its weekly inventory report today, which was neutral for crude oil and bullish for propane, but bearish for both distillates and gasoline.
Forward Curves ULSD RBOB NAT GAS DISTILLATE STOCKS
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX weakened some today with a slight downgrade to the two-week degree day forecast and a looser market balance expectation for next week. Cash natural gas prices strengthened today, with benchmark Henry Hub prices up 18 cents to $2.89/mmBtu, Transco Zone 6 prices in New York up 5 cents to $2.95/mmBtu, and Algonquin citygate prices up 16 cents to $4.36/mmBtu. The Global Forecast System trimmed its two-week HDD forecast by 7 to 449, below the 30-year average of 459 but still well above last year's 395 HDDs during the same period. Taking a regional perspective, the latest ECMWF 1-5 day outlook sees large deviations above normal temperatures in much of the Midwest and Northeast, and Refinitiv analysts have cut their total US demand forecast for next week by 1.5bcf/d to 123.6bcf/d, while trimming their supply forecast by just 0.2bcf/d to 99.7bcf/d, implying smaller withdrawals from storage of 23.9bcf/d. The EIA is due to release its weekly natural gas storage report for the week ended January 8 tomorrow, and analysts surveyed by Reuters see a 130bcf withdrawal being reported. This would fall short of the 161bcf five-year average withdrawal, but exceed last year's 91bcf decline in storage levels.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures edged up 0.1% today in an upside session, consistent with our upside bias. Slow stochastics have crossed for a sell signal in overbought territory, and the RSI confirms overbought conditions. Additionally, we saw a Doji star candlestick pattern today. Meanwhile, the MACD, major averages, and ADX all point higher. We'll keep our upside bias for now, but have been expecting a consolidation or retracement. We see nearby resistance at $1.6158 (today's high), followed by $1.6424, whereas the 9-day ma ($1.5414) and then $1.4000 are seen offering nearby support. RBOB futures edged down 0.3% today, but did so in an upside session, hitting new multi-month highs. Twice shy from the continued upside yesterday after falling to the sidelines prematurely on Monday, we'll await stronger evidence that the trend has ended. That being said, slow stochastics are overbought and have crossed for a sell signal, and the RSI confirms. As with ULSD, major averages and the MACD point higher. Nearby resistance at today's $1.5756 high, followed by $1.6000, while $1.5000 and then the 18-day ma ($1.4316) are expected to offer nearby support. WTI trade was similar, as we slipped 0.6% lower in an upside session, hitting a new multi-month high of $53.93. We'll look here and then to $55.58 for resistance, with support at $50.54 (23.6% retracement of the rally) and then down at $45.27. Natural gas futures, where we have been sidelined, shed 0.9% in a downside session today, settling above the 50-day ma ($2.719). There are sounds of a rounded top, and slow stochastics are bearish, but the RSI remains quite neutral and the MACD is rising towards the 0 line. We'll stick to the sidelines for now, with support expected at the 100-day ma ($2.640) and then at $2.403, whereas $2.769 and $2.898 are expected to offer resistance.