PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures strengthened today amid weakness in the dollar and gains in US stock market indexes, despite weakness in European shares and a bearish global oil demand forecast from the IEA. As noted in Pipeline, the Paris-based agency cut its first quarter forecast by 580kb/d and cut its forecast for the year overall by 300kb/d, citing the pandemic. Also unsupportive, the DAX fell 0.2% today despite encouraging economic data in the form of the ZEW Survey. The CAC 40 fell 0.3% and the FTSE 100 shed 0.1% Trade in US shares was supportive for crude as of this writing, with the Down up 0.5%, the S&P 500 having gained 0.9%, and with the Nasdaq rallying 1.4%. Also supportive for crude, the US dollar index was down 0.3%. Former Fed Chair (and nominee for Treasury Secretary) Yellen spoke today, calling for strong fiscal policy to support the economy. President-elect Biden is to be inaugurated tomorrow and last week outlined a $1.9tn package.
Forward Curves US Distillate Stocks
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures lost ground today with unsupportive shifts to the degree day outlook and expected market balance. The Global Forecast System cut its two-week HDD forecast from 443 to 415, further below the 452-HDD 30-year average and closer to last year's 400 HDDs during the same period. The latest 1-5 day ECMWF outlook calls for mixed but mostly above-normal temperatures across the country, and Refinitiv analysts cut their total US demand forecast for this week by 1.9bcf/d to 119.9bcf/d, while trimming their supply forecast by just 0.1bcf/d to 99.5bcf/d, implying smaller withdrawals of 20.4bcf/d. The 6-10 day outlook calls for above-normal temperatures in the Midwest but below-normal temperatures in the Northeast. Refinitiv sees total US demand rising by 6bcf/d to 125.9bcf/d next week, while supply ticks up to 99.7bcf/d, implying 26.2bcf/d withdrawals from storage. Cash natural gas prices strengthened. Benchmark Henry Hub prices rose 4 cents to $2.86/mmBtu, Zone 6 prices at the New York citygate jumped 36 cents higher to $3.06/mmBtu, and Algonquin citygate prices shot up $2.26 to $5.28/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures strengthened today, consistent with our upside bias - but they gapped lover over the weekend, making it a downside session. Slow stochastics and the RSI point lower, whereas major averages and the MACD point higher. Candlesticks still indicate a potential rounded top. Nevertheless, the conservative thing to do is to maintain our current stance, still seeing nearby support at the 9-day ma ($1.5808), now followed by $1.5000, whereas the recent $1.6235 high and then $1.6424 are our nearby resistance levels. RBOB futures also gapped lower but ended slightly higher in a downside session. We continue to favor upside chances for now, with $1.5756 and then $1.6000 resistance, while $1.5000 and then the 18-day ma ($1.4582) are seen offering nearby support. WTI futures similarly gapped lower to rise in a downside session. We continue to favor upside chances for now, seeing nearby support at the 9-day ma ($52.33) and then at $50.54, with $53.93 and then $55.58 resistance. Finally, natural gas futures fell today, rewarding us for sticking with the bears despite Friday's gains. We continue to favor downside chances given bearish slow stochastics, RSI, and candlesticks, and with the MACD looking to set to fall back below the 0 line and turn bearish. We are emboldened by the fac that we saw nearby 100-day ma support ($2.645, now nearby resistance) taken out today. Next support expected at $2.403 and then at $2.247 (reinforced by the 200-day ma), whereas next resistance after the 100-day ma is expected up at $2.769.