PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures lost ground today along with global equities and with bearish weekly US crude oil inventories from the EIA and another weekly rise in the US oil rig count. Economic data out of the Eurozone and the UK were disappointing, and European shares lost ground with the DAX shedding 0.2%, the FTSE 100 losing 0.3%, and the CAC 40 falling 0.6%. US existing home sales and Canadian retail sales data were more encouraging, but US shares were trading flat to lower as of this writing. The Nasdaq was off 0.1%, the S&P 500 had dipped 0.2% lower, and the Dow was trading 0.4% weaker. The US dollar index was up 0.1%, also unsupportive for crude. The weekly petroleum inventory report form the EIA, released late this week due to the holiday and the inauguration, showed a surprise 4.4mb build in crude oil inventories. Distillate data were neutral, whereas gasoline data were supportive and propane/propylene figures were bullish. In unsupportive supply-side news, Baker Hughes reported yet increase in the US oil rig count, of 2 this week to 289. This is, however, still 387 lower than last year at this time.
ULSD Forward Curves US Distillate Stocks
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX lost ground for a fourth consecutive session with a rise in the rig count, a downward revision to the two-week heating degree day forecast, and a looser picture of the US market balance for next week, despite a supportive weekly storage report from the EIA. The agency reported a 187bcf withdrawal from storage for the week ended January 15, topping the 174bcf predicted by analysts in a poll conducted by Reuters. This sharper-than-normal decline left storage levels at 3.009tcf, cutting the surplus over last year to just 1.2%, but still leaving inventories 7.0% higher than the five-year average for the reporting week. In unsupportive supply-side news, Baker Hughes reported a rise of 3 in the US natural gas rig count, leaving it at 88. Also unsupportive today was a downward revision of 4 to 406 in the GFS two-week HDD forecast. This is just above last year's 400 HDDs during the same period, but well below the 448 HDD 30-year average. Refinitiv analysts trimmed their total US supply forecast for next week by 0.1bcf/d to 99.8bcf/d, but cut their total demand forecast by 1.3bcf/d to 124.3bcf/d, implying smaller withdrawals from storage of 24.5bcf/d. Cash natural gas prices made mixed moves, with next-day Henry Hub prices falling by 8 cents to $2.49/mmBtu, while Transco Zone 6 prices in New York gained 10 cents to reach $2.50/mmBtu and ever-volatile Algonquin citygate prices jumped 63 cents higher to $3.62/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
NYMEX HO futures fell 1.5% today in a downside session, but settled well off of the lows and in the middle of the daily range. Still, with nearby 9-day ma support taken out ($1.5955) and with candlesticks now looking bearish along with the RSI and slow stochastics, as well as the MACD crossing to become neutral, we'll fall back to the sidelines pending bearish confirmation. After the 9-day ma we see resistance at $1.6235, whereas the $1.5000 and $1.4500 levels are seen offering support. RBOB futures edged up 0.1% today, consistent with our neutral/bullish stance. We settled way off of the lows and in the top portion of the daily range, and we'll continue to look for flat-to-higher price action, with nearby resistance at $1.5756 and then $1.600, whereas the 18-day ma ($1.4880) and then $1.3899 are still seen offering nearby support. WTI futures fell 1.6% today in a downside session, taking out nearby 9-day ma support ($52.88). As with ULSD, we fall back to the sidelines awaiting bearish confirmation. Nearby support at $50.54 and then $45.27, whereas the 9-day ma and then $53.93 are expected to offer resistance. Natural gas futures, where we have been favoring downside chances, fell 1.8% today in a downside session. There was a threat to $2.403 support at the lows, but bears did not quite manage to reach that level. We'll continue to look there and then down at $2.247, while the 100-day ma ($2.643) and then $2.769 are seen offering resistance.