Morning Update 03.15.21
Overview
Energy prices moved ahead overnight as data from China was supportive. However, prices have turned negative since then, despite the upbeat tone from analysts seen in news wire stories. Citi raised their Brent forecast for 2021 by $5 to $69. They even suggest that prices could rise to $75-80 in the next few months. The negative pricing today is said to be a function of a stronger U.S. dollar and the Covid-19 concerns raised by renewed lockdowns in Europe and India. (WSJ/Times of India)
Chinese refinery runs rose by 2.06 MMBPD to 14.13 MMBPD in the first 2 months of this year versus last year. They were up 1.45 MMBPD over 2019 levels. However, runs are seen falling in the second quarter due to maintenance. One analyst cited by Reuters sees runs falling below 13.5 MMBPD until May. China's industrial output and retail sales surged in the first two months of the year, official data showed Monday. Chinese industrial output rose by 35.1 % year on year. Retail sales beat expectations with 33.8 % growth. Reuters had forecast industrial production to grow by 30.0% and retail sales by 32%.
The Asian gasoline market is seen being aided by movement of product out of the region, heading West. The arb remains open. (Platts)
Friday's Baker Hughes oi rig count fell by 1 unit.
Money managers raised their net length in WTI on ICE/CME by a combined 8,048 contracts, mostly by covering shorts on the CME. ULSD net length rose by 2,973 contracts. RB net length rose by 5,632 contracts with longs rising more than shorts were covered.
Technicals
Despite positive momentum on the DC charts, the energies are showing some warning signs. One of them is the retreat in the value of the prompt month WTI spread. It settled in contango Friday for the first time in 2 months.
Another warning sign is the wall that has formed in WTI over the past few days. The past 3 sessions' highs lie between 6621 and 6640. Above this, we see reistance at 6708-10 via the 60-minute chart data. Support below comes in at 6454-57.
In Brent, the past 3 sessions' highs are between 6984 and 7003. Support is seen below at 6775-80.
ULSD has its resistance at 19645 then at 19801-23. Support lies at 1.9362-70, then at 1.9252-58. These values come from 60-min chart data.
RB hit resistance at the high today at 2.1675-2.1700. The high today is 2.1700. There is some light resistance below that at 2.1599. Support comes in at 2.1267, then at 2.1119.
Natural Gas
Spot futures have gapped lower as the calendar is set to turn to spring and the lower/shoulder period demand season. Prices are the lowest in 7 weeks.
Friday's Baker Hughes NG rig count was unchanged.
Money managers shed a great amount of net length on the CME in the latest CFTC data issued Friday. Net length fell by 40,510 contracts. 33,306 contracts of shorts were added. Total net length fell to 55,547 contracts.
Price action shows NG on the defensive, even as DC momentum remains positive and oversold. The gap created over the weekend lies from 2.584 to 2.561. Support below lies at 2.480-84, then at 2.454-2.458. Resistance is seen at 2.591-2.595, then at 2.623-2.624.
Disclaimer
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