PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
The complex once again saw see-saw trade in relatively small moves away from the unchanged mark, with strength in European and US shares supporting along with a weaker US dollar index, and with geopolitical tensions in the Middle East. There were reports of an explosion in Riyadh, and social media and local TV reports suggested a missile interception, which would follow a similar event over the weekend where Saudi-led forces claimed to have shot down a Houthi missile headed towards the capital. In economic news today, UK labor market data for December (and ILO data for the three months through November) were better than expected. The FTSE 100 rose 0.2% today, although it trailed a 0.9% rise in the CAC 40 and a 1.7% jump in the DAX. US shares were strengthening as of this writing, following stronger than expected home price appreciation and consumer confidence data. The Case-Shiller home price index rose 1.4% in November, topping the 1.0% forecast, and consumer confidence (Conference Board) came in at 89.3 this month, above consensus at 88.5. Also supportive for crude, the US dollar index was down 0.2%.
ulsd forward curves w/ rbob & nat gas distillate stocks
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX strengthened today along with the two-week heating degree day forecast. The Global Forecast System raised its two-week forecast from 423 to 435 HDDs, not far from the 30-year average of 440 and well above last year's 367 HDDs. Also supportive, Refinitiv analysts raised their total US demand forecast for next week by 1.0bcf/d to 123.8bcf/d, outpacing a 0.4bcf/d upward revision to the supply forecast to 99.9bcf/d. The latest 1-5 day ECMWF outlook calls for below-normal temperatures in both the Midwest and the Northeast. The 6-10 day forecast sees above-normal temperatures in the Midwest but continued below-normal temperatures for much of the East Coast. Next-day cash natural gas prices were mixed. Henry Hub prices rose by 18 cents to $2.63/mmBtu and Transco Zone 6 prices in New York increased by 4 cents to $2.49/mmBtu, but Algonquin citygate prices eased back by 35 cents to $5.25/mmBtu. Early estimates for Thursday's weekly EIA natural gas storage report, for the week ended January 22, call for a 136bcf withdrawal to be reported. This would fall well below the 174bcf five-year average and last year's 170bcf decline. For tomorrow's report, a Reuters poll calls for a 0.4mb rise in crude stocks as the refinery utilization rate falls by 0.5 percentage points to 82 percent. Gasoline stocks are expected to rise by 1.8mb, while distillate stock levels are seen falling by 0.4mb this latest reporting week.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
NYMEX HO rose 0.3% today in an upside session, not terribly inconsistent with our neutral stance, but we have to give it to the bulls that they managed to take out nearby 9-day ma resistance ($1.5975) on a settlement basis. This becomes nearby support, followed by $1.5000, whereas the recent $1.6235 high and then $1.6424 are our nearby resistance levels. We remain neutral, awaiting further developments. RBOB futures rose 0.8%, consistent with our flat-to-higher price view. We saw both a higher high and a higher low, and slow stochastics are bullish as are the major averages. However, the RSI is well into overbought territory at 73.4. At the same time, bulls managed to take out the recent $1.5756 high - which was nearby resistance - hitting a fresh high of $1.5890. We'll now shift our eye there, with $1.6956 after that, while the 18-day ma ($1.5094) and then $1.3899 are expected to offer support. WTI futures fell back 0.3% today, but in an upside session, consistent with our neutral view. We remain neutral, still seeing 9-day ma resistance ($52.86, held up a test today) with $53.93 after that, and $50.54 and then $45.27 as support. Natural gas bulls followed up on yesterday's gains, and slow stochastics and the RSI are now looking bullish. Bulls were able to take out nearby 100-day ma resistance ($2.644), and so we'll favor upside chances. Next resistance expected at $2.769 and then $2.898, with 100-day ma and then $2.403 support.