PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Crude oil and refined products futures opened weaker, but recovered later in the session, as US and European shares also strengthened as the day unfolded, and as the US dollar index fell. OPEC released its monthly oil market report this morning, which was relatively neutral. The group kept its 2021 global oil demand forecast steady, and also made no changes to its 2021 non-OPEC supply forecast, but did indicate that new variants of the coronavirus, rising infections, and a slow start to vaccination programs may cloud the economic recovery at least this quarter. Data in the report showed that OPEC oil production grew by 280kb/d to average 25.36mb/d last month, with increases in Libyan, Iraqi, and UAE output contributing. In US new today, weekly initial US jobless claims were a miss - rising much further than expected from 784,000 to 965,000. Consensus was down at 790,000. In other news, President-elect Biden was said to be set to unveil at $1.5tn stimulus package. As of this writing, the Dow was up 0.3%, as was the Nasdaq, while the S&P 500 had added 0.2%. European shares closed higher, with the FTSE 100 up 0.8%, the DAX gaining 0.4%, and the CAC 40 up 0.3%. Also supportive for oil prices, the US dollar index was off 0.1% as of this writing.
Forward Curves Distillate Stocks
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures saw modest strength this morning, but turned lower and settled in the red with a slightly weaker two-week degree day forecast and looser market balance expectation for next week, despite a supportive weekly storage report from the EIA. The agency reported a 134bcf withdrawal from storage for the week ended January 8, exceeding the 128bcf predicted by analysts in a Reuters poll. The drop left storage levels at 3.196tcf, which is 4.1% higher than last year and 7.3% higher than the five-year average for the reporting week. In unsupportive news, the Global Forecast System trimmed its two-week heating degree day forecast by 4 to 445, below the 30-year average of 458 - but still above last year's 395 HDDs. Also unsupportive, Refinitiv analysts raised their total US supply forecast for next week by 0.2bcf/d to 99.9bcf/d, and cut their total US demand forecast by 1.2bcf/d to 122.4bcf/d, implying smaller withdrawals of 22.5bcf/d. Cash natural gas prices softened, with benchmark Henry Hub prices falling 7 cents to $2.82/mmBtu, Transco Zone 6 prices in New York dropping 15 cents to $2.80/mmBtu, and Algonquin citygate prices falling 46 cents to $3.90/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures, where we cautiously stuck with the bulls yesterday, continued higher today with a 1.3% gain and fresh multi-month highs. Candlesticks, the MACD, major averages, and the ADX all point higher, whereas slow stochastics and the RSI are very much overbought. Volume was average today. We see next resistance at today's $1.6208 high, followed by $1.6424, whereas the 9-day ma ($1.5572) and then $1.4000 are our nearby support levels. RBOB futures edged up 0.3%, consistent with our upside bias, but they did so in a downside session (lower high and a lower low), suggesting the start of a rounded top. We'll refrain from calling one, even though slow stochastics are overbought and have crossed for a sell signal and there is confirmation from the RSI. Nearby resistance at yesterday's $1.5756 high, followed by $1.6000, whereas $1.5000 and then the 18-day ma ($1.4407) are seen offering nearby support. WTI futures also strengthened in a downside session, meaning we keep yesterday's $53.93 high as nearby resistance, followed by $55.58, while looking to $50.54 and then $45.27 for support. Indicators are similar to products. Finally, NYMEX natural gas futures continued lower today, falling 2.2% and providing the bearish confirmation we've been looking for. Slow stochastics and the RSI are bearish and have plenty of room below, and candlesticks look bearish as well. Next support expected at the 100-day ma ($2.642), which was threatened but not touched today, followed by $2.403, whereas $2.769 and $2.898 remain our nearby resistance levels.