PETROLEUM COMPLEX (WTI | BRENT | ULSD | RBOB)
Petroleum futures closed flat to higher today, featuring a widening in crack spreads as gains in products outpaced small changes in crude oil prices. Gains came today despite losses in global shares and news that OPEC+ is considering boosting its production by more than their currently planned 0.4mb/d, according to sources. The group is scheduled to meet on Monday. Also in the news today, the EIA released its monthly drilling productivity report which showed US crude oil production up by 31kb/d in July to 11.307mb/d. European shares closed in the red today as the FTSE 100 fell 0.3%, the CAC 40 lost 0.6%, and the DAX closed 0.7% lower, following a large set of economic data releases. Today’s headlines were Consumer Price Indices for France and Germany which both showed weaker than expected inflation. The CPI for France fell 0.2% in September, while forecasts called for a 0.1% dip, and the index for Germany showed no change in prices, whereas an increase of 0.1% was expected. In US economic news, the third estimate of Q2 US GDP growth matched expectations by showing a 6.7% increase. Weekly initial jobless claims were a miss by coming in at 362,000, above the Econoday consensus at 335,000. Also unsupportive, the Chicago PMI fell from 66.8 to 64.7 this month, missing forecasts at 65.3. As of this writing, the Nasdaq was down 0.2%, the S&P 500 had lost 0.9%, and the Dow had dropped 1.4% lower. The US dollar index was flat as of this writing.
NATURAL GAS | WEATHER | INVENTORIES
Natural gas futures turned back north today, their fifth session higher in the last six, amid a tighter US market balance expectation for next week, but despite an unsupportive weekly storage report from the Energy Information Administration (EIA) and a weaker two-week degree day forecast from the GFS. The EIA reported an 88bcf injection into underground natural gas storage for the week ended September 24, just above the 87bcf expectation. Total storage levels rose to 3.170tcf, which is 15.4% lower than last year and 6.3% below the five-year average for the reporting week. The Global Forecast System trimmed its total degree day (TDD) forecast for the next two weeks by 2 to 116 (37 heating and 79 cooling), which is further below both the 30-year average of 155 TDDs and last year's 137 TDDs over the same period. In supportive news, Refinitiv analysts now see total US supply of 98.7bcf/d outpacing US demand at 83.8bcf/d next week, implying smaller injections of 14.9bcf/d (compared to yesterday’s forecast at 15.1bcf/d). The nuclear power outage rate remained at 9% today, still below both the five-year average at 11% and last year’s 12% outage rate. In the cash market today, prices at the Henry Hub benchmark fell by 21 cents to $5.73/mmBtu, while Transco Zone 6 prices in New York held steady at $4.69/mmBtu and Algonquin citygate prices added 6 cents to $4.92mmBtu. Hurricane Sam is still expected to turn north and then northeast late Friday, according to the National Hurricane Center. Tropical Storm Victor has now formed in the Atlantic, but it is expected to pose no threat to land.
ENERGY TECHNICALS (WTI | ULSD | RBOB | NG)
ULSD futures added 1.5% in an upside session (higher high, higher low) – consistent with our bullish bias which we maintain. Slow stochastics are now leaving overbought territory but the RSI is now overbought at 71.7. Candlesticks and the MACD are bullish. We also saw another multi-year high at $2.3688 today, which now becomes nearby resistance, followed by $2.4070, whereas $2.2859 and $2.2280 are still expected to offer support. Also consistent with our directional bias, RBOB futures rose 1.1% in an upside session. Slow stochastics are still overbought, and the RSI and candlesticks point higher, whereas the MACD is neutral. We are going to remain bullish for now, seeing nearby resistance at $2.3695 and then $2.4483, while the 100-day ma ($2.2036) and the 18-day ma ($2.1679) are seen offering support. We took a neutral stance yesterday and WTI edged up 0.3% in an outside session (higher high, lower low), consistent with that view. We are going to remain on the sidelines, awaiting further developments. We continue to look to $76.98 and then $82.88 for resistance, with $73.29 and then the 18-day ma ($71.92) expected to offer support. NYMEX natural gas futures gapped lower but rose intraday to settle 7.1% higher in a downside session (lower high, lower low) – somewhat consistent with our neutral bias. This could represent a retracement after yesterday’s heavy losses, which we noted could happen. We remain neutral for now, seeing nearby support at $5.717 (taken out today) and then down at $5.411, whereas $5.900 and $6.107 are our resistance levels.