Morning Update 03.23.21
Overview
Energies are sharply lower due to a host of bearish news, but most notably due to lockdown measures and Covid-19 case concerns.
Germany's federal and state governments agreed to extend the country's lockdown by three weeks to April 18. (Platts) Increases in Covid-19 cases have been seen globally. The U.S. seven-day average of daily new coronavirus cases is up by at least 5% in 27 states, according to data compiled by Johns Hopkins University. New variants appear to have caused severe surges across much of Europe and other parts of the world. (CNBC) India on Monday reported 46,951 new coronavirus cases, its worst single-day rise since early November, and 212 new Covid-19 deaths, the most since early January. (AlJazeera) The recent suspension of AstraZeneca vaccinations and the lockdown measures could dent oil demand by as much as a million barrels a day, Rystad Energy said Monday. (WSJ)
Western nations imposed more sanctions against China, causing equities in China to slip. China and the European Union traded sanctions against each other's officials Monday and the U.S. joined the U.K. and Canada "in parallel to measures by the European Union" to protest "human rights violations and abuses" in the western Xinjiang region. (NPR.org)
On the positive front, OPEC+ production in February was 37.83 MMBPD, its lowest since October, according to the latest Platts OPEC+ survey. Saudi Aramco cut term allocations by 10% to 15% for April-loading to buyers in Asia, which was mostly within expectations. Nevertheless, most refiners are unperturbed by these cuts as demand across Asia remains muted amid bloated crude stocks in China and Japan and curtailed margins compelling refineries to opt for downtime. Also, large unsold stocks of West African crude remain an enticing option for refiners.(Platts) Nigeria lowered its official selling prices for April-loading cargoes on Monday. Also, more loading programs of Nigerian Bonny Light crude for the next trading cycle, May, emerged.(Reuters)
Technicals
RB and Brent slid to new lows today for the recent selloff. Momentum is negative for the energies. Open interest has fallen dramatically during the recent selloff. Some of it may be a function of liquidation of positons in the expiring April contract.
Spot WTI futures have support at 5891-94. The overnight low is below that at 5847. Below this we see support at last week's low of 5820. Resistance above comes in at 6095-97. The high seen overnight is 6135.
May RB futures have support at 1.8982. Resistance lies at 1.9285-1.9300, then at 1.9389-97. These are well below the 1.9591 overnight high.
ULSD May support lies at 1.7570-90. The low seen today is 17589. Below this we see support at 1.7459. Resistance comes in at 1.7951-65, then at 1.8187-97. Both are below the overnight high of 1.8273.
May Brent support is seen at 6141-45, which is the overnight low. Below this we see support at 6072. Resistance lies at 6370-76, which is below the overnight high of 6430.
Natural Gas
NG is down on the day as weather in the U.S. remains bearish. But NG has a somewhat positive look technically. It is holding well above the lows of the past 6 sessions. Spot futures settled yesterday over the triple top at 2.561-66 seen last week. The past 3 sessions have a stepladder up look. Momentum is positive. The only drawback technically is the fact that CME NG futures trading volume remains subdued, suggesting a lack of conviction on price direction. The lack of weather demand in the U.S. may be the cause.
Strong LNG feedgas volumes was cited for Monday's rally. Feedgas volumes might well stay strong given overseas storage levels. As of mid-March, there was 361 TWH of natural gas in storage in the European Union, representing only a third of the region’s capacity, according to NGI data. That is nearly 270 TWH below the year-earlier level. Asian demand for U.S. exports continues after a particularly cold winter. (NGI)
Looking ahead to Thursday’s EIA storage report, NGI’s model estimated a withdrawal of 17 BCF for the week ended March 19. Bespoke Weather Service is looking for a pull of 26 BCF. The 5-year average for the week is -51 BCF.
Spot futures have support at 2.522-23, then at 2.478-79. Resistance lies at 2.591-96, then at 2.623-26.
Disclaimer
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