Morning Update 03.30.21
Overview
Energies are lower as the Suez Canal has reopened and crude supplies are seen as ample currently. A U.S. dollar rally also weighed on oil prices. Renewed lockdown restrictions in Europe and slower than expected vaccine rollouts are likely to check a global recovery in fuel demand. (Reuters)
Saudi Arabia is prepared to support extending oil cuts by OPEC and allies into May and June and is also ready to extend its own voluntary cuts to boost oil prices. “They don’t see demand as yet strong enough and want to prevent prices from falling,” a source said. (Reuters)
Reuters has reitereated the story of Iran shipping large amounts of crude to China this month. Chinese imports from Iran are seen as high as 1 MMBPD. "OPEC+ cuts will likely rollover, based on excess supply in the Atlantic Basin. There are a lot of West African grades available, and Mediterranean grades are also available at a good discount," said a trader with an Indian refinery. (Platts)
Reuters paints a negative picture of European demand. The arrival of U.S. diesel and gasoil into Europe dropped to zero last week in response to weak demand, Refinitiv data showed. March arrivals are expected to be at a record low. April arrivals were also expected to remain subdued. By contrast, Apple Mobility data showed that US driving activity rose 3.3% last week and was the strongest since the week ended September 18.(Platts)
Royal Dutch Shell Plc restarted the gasoline- and diesel-producing units on Sunday at its 318 MBPD joint-venture in the Deer Park, Texas refinery. The 70 MBPD gasoline-producing fluidic catalytic cracker (FCC) and 67 MBPD hydrocracker have been shut since February 15. (Reuters)
Traders said that while trading activity appeared to be healthy on the first day of the Murban futures contract, overall market interest may pick up starting April 1 when the broader market starts trading Middle East crude loading in June. Murban futures traded a total of 6,344 contracts on its first day on Monday. June is the first contract month available for trading. In comparison, the existing Oman futures contract traded on the Dubai Mercantile Exchange (DME) had total volume traded of 873 contracts.
Technicals
Despite being lower, crude oil and RB still have an upward bias look to recent price action and positive momentum.
May ULSD, though, seems to have hit a wall above 1.8225. There is a double top at 1.8272-81 from yesterday/today. Support below lies at 1.7810-26, which is being tested. Support below that lies at 1.7656-63.
RB support for May is seen at 1.9522-32. Resistance lies at 2.0183-2.0200. The overnight high is 2.0254. Above this we see resistance at 2.0302-21
June Brent futures have support at 6330-33. Its resistance comes in at the double top from yesterday/today at 6534-39.
WTI support at 5933-43. Resistance lies at 6134-36. Above this resistance is seen at the overnight high at 6226-27.
Natural Gas
NG is higher today on the basis of the DC chart due to a rollover gap as May becomes the front month futures contract. The gap currently runs from 2.620 down to 2.607.
NGI forecasts this week's EIA storage data to show a build of 18 BCF, which is worse than the 5-year average draw for the period of 24 BCF and last year's pull of 20 BCF.
NG seems stuck between strong LNG feedgas volume and weak weather demand, which looks bearish in April, as per NGI reporting. While on Monday, LNG feed gas volumes approached 11.6 BCF, near a record and on par with levels recorded throughout last week, according to NGI data. Favorable transatlantic economics are seen given Europe is expected to import 2.1 BCFD more LNG year over year in Q2’21 to help close its 900 BCF year over year storage deficit," say analysts at Energy Aspects, noting this should help to limit the weekly spring and summer injections to US storage. (WSJ)
Technically, NG has positive momentum. Support for the spot futures is seen at 2.581-2.587. resistance lies at the area of the overnight high at 2688-2.693.
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.