Morning Update 03.26.21
Overview
Energies have risen as it could take weeks to dislodge a giant container ship blocking the Suez Canal, which would squeeze supplies of crude and refined products. WSJ reporting also cites President Biden's promise to unveil a long-term "economic rejuvenation plan" next week as a driver for higher prices today.
The oil markets were also lifted by worries over escalating geopolitical risk in the Middle East. The Houthis were said to have hit a petroleum product distribution terminal at a Saudi Aramco facility. (Platts/Reuters)
OPEC+ is set to meet on April 1 and most news wires cite analysts saying the group will roll over their current accord, thus keeping supplies on the tighter side.
The Suez Canal saw 5.1 MMBPD of crude oil and oil products moved through the waterway in 2019. 31 MM Metirc Tonnes of LNG were transported through the canal in 2019. The market is starting to factor in the possibility that refloating the ship could take several days to weeks. Reuters says that an already weak Asian gasoil, or diesel, market is also being made worse by the blockage since Asia exports the fuel to markets in the west, like Europe, of which more than 60% flowed via the chocked canal in 2020, according to FGE consultancy. Around 40 oil and LNG tankers have piled up to transit the waterway. There were at least 21 crude tankers -- estimated to be carrying around 18 million barrels -- and 14 product tankers -- holding around 500,000 mt -- waiting to navigate through the canal, according to data from cFlow, Platts' trade flow software. Some sources said that if the Suez Canal reopens early next week, it could take somewhere between 7 and 14 days to clear the backlog. (Platts)
Technicals
Momentum is trying to turn positive for the crude oils and ULSD. RB May futures have positive momentum. The price action of the past several days for the energies has a sideways pattern.
WTI May futures see support at 5814-20, which is just below the overnight low of 5832. Resistance above comes in at 6134-35.
May Brent see support at 6207-09, which was tested with a low of 6185. Resistance above lies at 6419-30.
May RB sees its support at 19164-76, which is the overnight low. There is some light support above that at 1.9300-15. Resistance comes in at 1.9793-1.9811.
ULSD in May has support at the prior 3 sessions' lows at 1.7315-35. Resistance comes in at 1.8308-26.
Natural Gas
NG futures are near unchanged today. NG rose Thursday on the back of a better than expected EIA storage number. The delay in LNG supplies out of Qatar due to the Suez Canal closure was also cited by NGI as helping prices. The delay may boost U.S. Gulf Coast exports.
Thursday's EIA data showed a draw of 36 BCF, beating estmates for a 21 to 26 BCF draw. Total storage is 1.746 TCF, which is 263 BCF below year ago levels and is -78 BCF versus the 5-year average.
Technically, NG has a sidweays to higher pattern. Volume traded in NG futures on the CME remains muted. Today is the last day for the April NG options. The $2.55 strike open interest on the CME is not very large. The $2.50 and $2.60 strikes have more open interest.
Support for May NG futures comes in at 2.547-2.551. There is light resistance at 2.628-2.629. Above that resistance lies at 2.657-2.660.
Disclaimer
Commodity trading involves risks, and you should fully understand those risks prior to trading. Liquidity Energy LLC, and its affiliates assume no liability for the use of any information contained herein. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures or options on futures contracts. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice, are that of the individual, and not necessarily the opinion of Liquidity Energy.