PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures extended their rally today amid strength in US shares following encouraging US economic data releases and an upward oil price forecast revision by Goldman Sachs, despite strength in the US dollar and weakness in European shares. The FTSE 100 shed 0.3% today, while the CAC 40 lost 0.8% and the DAX dropped 1.0% amid mixed economic data releases. In North American news, the Canadian merchandise trade balance saw a surprise $C1.41bn surplus in January, and while the US goods and services trade deficit was larger than expected the same month ($68.2bn), the US Employment Situation Report for last month was a positive surprise. US nonfarm payrolls growth of 379,000 far outpaced expectations at 175,000, and January payrolls were revised up by 117,000. The unemployment rate saw a surprise 0.1pp drop to 6.2%, and the labor force participation rate increased by 0.1p to 61.4%. As of this writing, the Nasdaq had gained 0.7% and the S&P 500 and Dow were both seeing gains of over one percent. In slightly unsupportive supply-side news today, Baker Hughes reported an uptick of 1 in the US oil rig count this week, to 310.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures on NYMEX lost some ground today with a weaker degree-day forecast. The Global Forecast System sees 277 HDDs over the next two weeks, down from 287 in the previous outlook. This is closer to last year's 256 HDDs and below the 30-year average of 312. Also slightly unsupportive, Refinitiv analysts trimmed their total US demand forecast for next week by 0.2bcf/d, while the supply forecast was revised down just 0.1bcf/d, implying smaller withdrawals of 6.2bcf/d. The latest 1-5 day ECMWF outlook calls for Midwestern temperatures to average well above normal, while below-normal temperatures are expected on the East Coast, especially in parts of New England. The 6-10 forecast, however, calls for above-normal temperatures in consuming regions. Baker Hughes reported no change in the US natural gas rig count for this week, holding at 92. Cash natural gas prices weakened, with benchmark Henry Hub prices down 7 cents to $2.79/mmBtu, Zone 6 prices in New York down by 17 cents to $2.85/mmBtu, and Algonquin citygate prices dropping 95 cents to $7.30/mmBtu.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures continued higher today, gaining 2.5% in an upside session and hitting fresh highs of over a year with solid volume behind the move. We remain bullish, seeing next resistance at $1.9695 and then at $2.0000, with the 9-day ma ($1.8713) and then $1.8330 seen offering support. Whereas we favored upside chances with HO, we were neutral regarding RBOB, and futures jumped 2.5% higher in an upside session, also hitting new highs. Bulls took out the $2.0000 mark in a gap higher by the open, and we'll look there and then down at the 18-day ma ($1.8397) for support, whereas today's $2.0678 high and then $2.1108 are our nearby resistance levels. Higher chances for higher prices. WTI futures climbed 3.5% higher in an upside session today, also hitting fresh highs, and also pulling us off of the sidelines and siding with the bulls - with the usual caveat about the session following a move of this magnitude. We see resistance at $66.85 and then $73.29, whereas $63.75 and then $59.67 are expected to offer support. NYMEX natural gas futures fell 1.6% today in an inside session (lower high, but a higher low). We remain neutral for now, looking to $2.403 and then $2.000 for support, whereas $2.758 and $2.898 are our nearby resistance levels.