PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures turned back south today amid losses in US and European equities, despite weakness in the US dollar and bullish crude oil and distillate inventory data from the EIA. The inventory figures from the Energy Information Administration were neutral for gasoline and propane. In economic news, the flash Eurozone consumer confidence index came in at -14.8 this month, below forecasts at -14.0. In US news, weekly initial jobless claims came in at 861,000, well above expectations at 768,000, and up from 848,000 the prior week. Housing starts fell from an upwardly-revised annualized rate of 1.680m in December to 1.580m in January, missing the Econoday consensus at 1.655m. On the other hand, permits were a beat as they came in at 1.881m, well above the 1.670m consensus. The Philadelphia Fed Manufacturing Index for this month came in at 23.1, beating expectations at 20.0. European stock markets closed in the red today with the DAX down 0.2%, the CAC 40 losing 0.7%, and the FTSE 100 dropping 1.4%. As of this writing, US stock market indexes were seeing losses of between 0.3% (Dow) and 0.7% (Nasdaq). In supportive news, the US dollar index was down 0.35%.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures fell today amid a weaker two-week heating degree day forecast and a bearish weekly storage report from the Energy Information Administration (EIA). The EIA reported a 237bcf withdrawal from underground natural gas storage for the week ended February 12, below forecasts at 252bcf. Total storage levels fell to 2.281tcf, which is 4.4% lower than last year, but 2.6% above the five-year average for the reporting week. The Global Forecast System cut its heating degree day forecast for the next two weeks from 401 to 397, which is still above the 30-year average of 370, but below last year's 405 HDDs over the same period. The latest 1-5 day outlook (EC) sees below-normal temperatures in the Midwest and the Northeast. The 6-10 and 11-15 day forecasts are less supportive with above-normal temperatures expected across the eastern half of the country. Refinitiv analysts now see total US demand of 119.3bcf/d outpacing US supply at 86.0bcf/d next week, implying larger withdrawals of 33.3bcf/d (compared to yesterday’s forecast at 33.0bcf/d). In the cash market today, prices at the Henry Hub benchmark jumped from $11.32 to $23.86/mmBtu, while Transco Zone 6 prices in New York fell from $14.96 to $13.80/mmBtu, and Algonquin citygate prices dropped from $12.30 to $11.00/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures edged down 0.1% but did so in an upside session (higher high, higher low). Slow stochastics and the RSI are still overbought, while the MACD, candlesticks, and moving averages are all bullish. We are going to continue to favor upside chances, still seeing nearby resistance at $1.9000 and then up at $1.9509, while $1.8330 and the 9-day ma ($1.7758) are expected to offer support. RBOB futures fell 0.9% in an upside session – not consistent with our bullish bias. Technical indicators are similar to those in ULSD, so we are going to remain bullish for a bit longer, still seeing nearby support at the 18-day ma ($1.6525), followed by $1.4900, whereas $1.8500 and $1.9000 are seen offering resistance. WTI futures, where we were also bullish, lost 1.0% in an upside session. As with products, we are going to continue to favor the upside chances for a bit longer, looking at $62.26 (today’s high) and $63.75 for resistance, with $59.50 and $57.21 expected to offer support. Finally, natural gas futures dropped 4.3% in a downside session (lower high, lower low) – inconsistent with our bullish bias. Stochastics and the RSI are neutral, along with candlesticks, while the MACD is bullish. We are going to remain bullish for now, awaiting further developments. Nearby resistance is seen at $3.316 (yesterday’s high), followed by $3.500, while $2.898 and $2.758 are our nearby support levels.