Morning Update 04.12.21
Overview
Energies are higher on improved prospects for demand. A lower U.S. dollar and some Mideast tension may be helping.
Platts describes the higher prices as due to optimism over an accelerated vaccination drive in Europe and an economic recovery in the US. While Reuters mentioned optimism over a rebound in the U.S. economy as coronavirus vaccinations accelerated.
We see Mideast tensions rising from three separate events. The Houthis launched 17 drones at Saudi targets, including refineries in Jeddah and Jubail. No damage was reported. (Reuters) Platts reports that Libyan Petroleum Facilities Guards are threatening to strike later this month. The PFG controls key eastern terminals and some oil fields in Libya. Iran says that a new nuclear facility was hit by "sabotage.” The result of the cyber attack, supposedly perpetrated by Israel, was a power outage.The Israelis seem disturbed by the ongoing nuclear talks being held in Vienna. Iran has vowed revenge for the attack. (BBC/Reuters)
The gasoil market in Asia is seeing an uptick. The crack from Dubai crude reached a 5-week high, as per Reuters reporting. The strength is said to come from refinery maintenance this spring tightening supply. Turnarounds are scheduled in China, Japan and South Korea. Outages at refineries in Japan and Indonesia are supportive. Also, some help has come from new VLCCs being loaded with product on their maiden voyage. The crack was valued at $6.92. In February, the crack averaged $6.99. Platts reported that sentiment had improved to boost the Q2/Q3 gasoil swap last week by 20 cents from the week before.
The Baker Hughes oil rig count was unchanged in the latest report issued Friday.
CFTC data seen Friday showed money managers reduced their net length in WTI futures/options on ICE/CME by a combined 18,604 contracts. Most of this was due to shedding of longs on the CME. However, money managers raised their net length in products on the CME. RB length rose by 1,385 contracts, ULSD length rose by 3,371 contracts in the week ended Tuesday April 6.
Technicals
The overall range seen recently remains intact. Momentum is positive.
May WTI sees support at 5882-86, tested today with a low of 5873. Resistance above comes in at 6086-90.
May RB support lies at 1.9550-75, then at 1.9400. Resistance comes in at 1.9925-40 via the 60 minute chart.
ULSD is the strongest component today. It has support for May at the double bottom from Friday/today at 1.7877-82. Above this, there is some support at 1.8007-25. Resistance lies at 1.8406-07, then at 1.8487
Natural Gas
NG is said to be up due to "improved balances" as per NGI reporting. The improved balances are seen as a result of the past few weeks' storage numbers being a bit better than anticipated. Also, the weather trended a bit cooler over the weekend, boosting demand in the middle of the U.S. as per Bespoke Weather. (NGI)
Friday's Baker Hughes NG rIg count showed an increase of 2 units.
CFTC data out Friday showed money managers reduced their net length in futures/options in the CME by 18,522 contracts. They added new shorts and shed longs. Net total length stood at 731 contracts as of Tuesday April 6. This underscores the recent trend of low volume, lack of volatility and lack of a trend.
Technically, the May contract found “considerable support” in the mid-$2.40s area, analysts at EBW Analytics said. (NGI) The picture for spot NG prices shows rising lows the past 4 sessions, which is supportive. Momentum has turned positive on the DC chart. Recent resistance in the mid $2.50s has been pierced. We find support there now at the 2.551-53 area. Below that we see support at 2.502-03. Resistance lies at 2.615-2.616, then at 2.656-2.663.
Disclaimer
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