PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures mostly strengthened today, with EIA crude oil inventory data supporting, and with the gasoline crack narrowing following bearish EIA gasoline stock figures. Data for distillates were neutral, whereas figures for propane were supportive. See our DOE Report for more. The price action was also likely supported today by weakness in the US dollar index, it's fourth session lower. On the other hand, European shares lost ground today. The CAC 40 lost 0.4% following disappointing French industrial production figures. The DAX in Germany fell 0.6%, despite neutral consumer price inflation data, and the FTSE 100 in the UK shed 0.1%. As of this writing, US stock market indexes were mixed but mostly in the red. The Dow was up 0.2%, but the S&P 500 was slightly in the red and the Nasdaq was down 0.2%.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX strengthened today with a slightly higher degree day forecast and slightly tighter US market balance expectation for next week. The Global Forecast System raised its two-week HDD forecast by 5 to 526, which is well above the 30-year average of 399 and also last year's 405 HDDs. The latest 1-5 and 6-10 day outlooks based on the European model continue to call for far below normal temperatures in the central part of the country, with below-normal temperatures on the East Coast as well, but with generally smaller expected deviations below normal. Cash natural gas prices were mixed, with benchmark Henry Hub prices slipping 5 cents lower to $3.35/mmBtu and Algonquin citygate prices falling 40 cents to $10.85/mmBtu, but with a 12-cent gain in Transco Zone 6 pricing at the New York citygate, putting prices there at $4.19/mmBtu. Refinitiv analysts raised their total US demand forecast for next week by 0.3 to 148.7bcf/d, while trimming their total supply forecast by 0.3 to 98.8bcf/d, implying larger withdrawals from storage of 49.9bcf/d. The EIA is due to release its storage report for the week ended February 5 tomorrow, and analysts polled by Reuters see a 181bcf drop. This would far exceed the 125bcf five-year average withdrawal and also last year's 121bcf drop.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD edged up 0.2% in an upside session (higher high, higher low) – printing a Doji star shaped candlestick. We are going to continue to favor upside chances, noting that stochastics and the RSI are still overbought. Nearby resistance is seen at $1.7677 (today’s high) and then at $1.8330, with the 9-day ma ($1.6992) and $1.6424 expected to offer support. RBOB futures fell 1.2% in a downside session (lower high, lower low) – inconsistent with our neutral/bullish bias. We are going to fall onto the sidelines now, still seeing nearby support at the 18-day ma ($1.5963) and then down at $1.4900, while $1.7000 and $1.7500 are seen offering resistance. Slow stochastics and the RSI are bearish now, while the MACD is neutral. WTI futures settled 0.5% higher in an upside session, consistent with our bullish bias which we continue to maintain. We continue to see nearby resistance at $58.91 (today’s high), followed by $63.75, whereas the 9-day ma ($56.03) and then $50.54 are seen as nearby support levels. Natural gas futures rose 2.7% in an outside session (higher high, lower low), somewhat consistent with our neutral/bearish stance. Slow stochastics and the RSI are neutral, while the MACD is bullish. We now see nearby support at $2.898 (taken out today) and then down at $2.758, with $3.171 and $3.500 expected to offer resistance.