PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Brent crude futures extended their rally to a sixth session, and WTI climbed higher for a fifth session, as global shares continued higher as well. The FTSE 100 and the CAC 40 each gained 0.5% today, although the DAX lagged - holding steady following a miss in headline December German industrial production growth numbers (even though there were strong base effects from a large upward revision to November output growth). As of this writing, US shares were strengthening as well, with both the Dow and the S&P 500 up 0.4%, while the Nasdaq was trading 0.6% higher. The US dollar index, which has been strengthening early on, had fallen into the red was down by 0.1%, also supportive for crude.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures edged higher today, with a stronger degree day forecast supporting, whereas a looser expected US market balance this week was unsupportive. Refinitiv analysts cut their total US demand forecast for this week by 1.6 to 132.6bcf/d, while trimming their supply forecast by just 0.1 to 99.2bcf/d, implying smaller withdrawals of 33.4bcf/d. Next week, however, analysts see total US demand rocketing up 20.0 to 152.6bcf/d, while supply rises by just 0.2 to 99.4bcf/d. For the next two weeks overall, the Global Forecast System revised up its heating degree day forecast from 514 to 544 - far in excess of last year's 405 HDDs, which matched the 30-year average. The latest 1-5 and 6-10 day ECMWF outlooks call for temperatures to average well below normal across much of the country, including in the Midwest and the Northeast. Cash natural gas prices surged, with Henry Hub prices up 50 cents to $3.49/mmBtu, Transco Zone 6 prices in New York jumping $1.23 higher to $4.27/mmBtu, and Algonquin citygate prices shooting up $4.74 to $11.50/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures climbed 2.0% higher today in an upside session, hitting a fresh high just below $1.7500 resistance. Volume was thin, and the RSI and slow stochastics are both deeply overbought, but we'll continue to favor upside chances until we see strong evidence that the trend has ended. After $1.7500, we see next resistance at $1.8330, whereas the 9-day ma ($1.6651) and then $1.5000 are our nearby support levels. RBOB futures climbed 1.5% higher in an upside session today, also hitting fresh high. Both stochastics and the RSI are deep into overbought territory here as well, but we remain neutral/bullish for now, seeing $1.6795 (today's high) and then $1.7000 resistance, with 18-day ma ($1.5838) and then $1.4900 support. WTI strengthened 2.0% in an upside session, hitting a new high of over a year at $58.14. This becomes nearby resistance, followed by $63.75, while the 9-day ma ($54.72) and then $50.54 are seen offering nearby support. As with products, we remain sided with the bulls but note that we are very much overbought. Natural gas futures, where we are neutral, edged up 0.7% today in a downside session (lower low, lower high), consistent with that view. The RSI and slow stochastics are neutral, while the MACD and major averages point weakly higher. Nearby resistance at $2.898 and then $3.171, with $2.758 and then 100-day ma ($2.679) support.