PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures strengthened further today, with gains of over 2.0%, amid a bullish monthly oil market report from OPEC, strength in US and European equities, and weakness in the US dollar. OPEC released its monthly report today in which it raised its 2021 oil demand growth forecast by 5.89mb/d to 96.3mb/d, stating that most of the oil consumption will occur in the second half of the year. The group also said that “this year’s demand growth will not be able to compensate for the major shortfall from 2020 as mobility is forecast to remain impaired throughout 2021.” On the supply side, OPEC said that its production fell by 0.65mb/d to 24.85mb/d last month, mainly due to Saudi Arabia’s voluntary output cut. In economic news, the European Central Bank kept rates steady this month, as expected. The FTSE 100 and the DAX closed 0.2% higher, while the CAC 40 added 0.7% today. In US news, the Job Openings and Labor Turnover Survey (JOLTS) put openings at 6.917m in January, beating expectations at 6.585m and up from an upwardly-revised 6.752m in December. Also supportive, weekly initial jobless claims fell from an upwardly-revised 754,000, past the 725,000 consensus, to 745,000. As of this writing, US stock market indexes were seeing gains of between 0.9% (Dow) and 2.6% (Nasdaq). Also supportive for crude oil prices, the US dollar index was down 0.4%.
Forward Curves for ulsd rbob nat bas as well as distillate stocks
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures turned back south today amid a bearish weekly storage report from the Energy Information Administration (EIA), despite a stronger two-week heating degree day forecast. The EIA reported a 52bcf withdrawal from underground natural gas storage for the week ended March 5, well below forecasts at 73bcf. Total storage levels fell to 1.793tcf, which is 12.5% lower than last year and 7.3% below the five-year average for the reporting week. In the cash market today, prices at the Henry Hub benchmark held steady at $2.62/mmBtu, while Transco Zone 6 prices in New York fell from $2.24 to $2.13/mmBtu and Algonquin citygate prices dropped from $2.70 to $2.35/mmBtu. The Global Forecast System raised its heating degree day forecast for the next two weeks by 10 to 246, which is equal to last year’s HDDs over the same period, but below the 30-year average of 287. The latest 1-5 day outlook (EC) continues to call for above-normal temperatures across the eastern half of the country. The 6-10 forecast is more supportive with mixed temperatures seen in the Midwest, while mostly below-normal temperatures are expected in the Northeast. Refinitiv analysts now see total US demand of 103.0bcf/d outpacing US supply at 99.4bcf/d next week, implying slightly larger withdrawals of 3.6bcf/d (compared to yesterday’s forecast at 3.5bcf/d).
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures rose 2.2% in an upside session (higher high, higher low) – consistent with our bullish bias which we maintain. Slow stochastics are neutral, while the RSI is overbought. The MACD looks set to cross and become bullish, along with moving averages and candlesticks. We continue to see nearby resistance at $1.9695 and then up at $2.0000, while the 9-day ma ($1.8883) and $1.8330 remain our nearby support levels. RBOB futures added 2.8% in an upside session today, hitting a fresh high of $2.1455 – also consistent with our bullish bias. The RSI is still overbought, while slow stochastics, the MACD, and candlesticks are all bullish. We now see nearby resistance at today’s high and then up at $2.1904, while $2.0000 and the 18-day ma ($1.9310) are expected to offer support. Consistent with our directional bias, WTI settled 2.5% higher in an upside session today. We remain bullish, seeing nearby resistance at $66.85 and then up at $73.29, with $63.75 and $59.67 seen as nearby support levels. Natural gas futures, where we abandoned the bears yesterday, fell 0.9% in an upside session, which is consistent with our neutral stance. Slow stochastics are bullish, while the RSI and candlesticks are neutral, and the MACD just crossed the zero line and became bearish. We continue to look to $2.758 and $2.898 for resistance, while $2.403 and $2.000 are our nearby support levels.