Morning Update 04.20.21
Overview
Energies are higher, propelled by a loss of crude oil exports from Libya and a weaker U.S. dollar.
Monday news came out of Libya that production in several of Libya's major eastern oil fields had been shut down. Pumping at the fields was halted due to the government's failure to send federal funds for operations to a subsidiary since September. The National Oil Corporation subsidiary operates eight oil fields with a total capacity of 250 MBPD. It was doubtful the company would completely shut in production at its fields, with some amount of crude and associated gas needed to maintain power generation. Two fields producing a combined 160 MBPD are said to have reduced flow. Libya’s National Oil Corporation declared force majeure on exports from the port of Hariga, it said in a statement on Monday, due to the subsidiary suspending output. Hariga is scheduled to load about 180 MBPD in April. Exports from Marsa el-Hariga have recently averaged 250 MBPD. (Platts/Reuters)
The Euro was supported as Europe closes the gap with the U.S. on vaccinations. The dollar has fallen with Treasury yields retreating from 14-month highs. The Euro and yen are at their highest levels versus the dollar since early March. (Reuters)
Reuters also cites support today from an expected drop in crude supplies in this week's U.S. petroleum data. Crude supplies are forecast to drop by 2.9 to 4.4 MMBBL, while Distillate supplies are forecast to fall by 1.3 MMBBL. However, gasoline supplies are expected to rise by 0.8 MMBBL. (Platts/Reuters)
The move up in oil prices today has come despite worries about rising Covid-19 cases in some nations and the resulting dent in gasoline and jet fuel demand. Notable is the record number of new cases seen Monday in India. As a result of the recent rise in Covid-19 cases in India, gasoline demand there is seen taking a near term hit as new lockdowns are being imposed. One state in India instituted a lockdown April 10 until May 1, which affects 125 million people. The city of Mumbai has seen driving activity drop to 70% of baseline levels as of April 10, which is the lowest level seen since July 2020. In February, driving activity was 40% over baseline activity. Overall gasoline demand in India is seen falling to 701 MBPD in April, which is down 11.51% from March. Recovery for demand is seen only from June on. However, refiners are not seen scaling back runs too much as demand in Asia and the Mideast is supportive. Gasoline margins for refiners in India remain healthy. India is the world’s third-biggest oil importer. (Reuters/Platts)
Hong Kong will suspend flights from India, Pakistan and the Philippines from April 20 for two weeks. (Reuters)
Today is the last trading day for the May WTI futures. One year ago on this day, WTI futures traded at negative values. Over the past month or so, prices have returned to pre-pandemic levels. Crude and ULSD prices are near the levels seen at the beginning of 2020, while the price of the spot RB futures recently rose to a value not seen since April 2019.
Technicals
Price action for the energies is firm, but the stochastic momentum indicator is showing ULSD as overbought and RB & the crude oils are very nearly overbought.
WTI has resistance for June futures at 6455-68. Support lies at 6280-88
June RB support lies at 2.0320-25. Resistance comes in at 2.06440-56, then at today's high at 2.0742.
ULSD for June sees its support at 1.8821-36. Its resistance lies at 1.9109-20. The overnight high is above that at 1.9174.
June Brent support is seen at 6644-50. Resistance lies at today's high at 6808-15.
Natural Gas
Prices have pulled back today as some see the recent cooling demand uptick as being priced in. Also, as per WSJ reporting, May might see reduced gas-fired electricity demand due to higher output from wind farms.
NG settled Monday at its best value for the spot futures since March 3. Prices have risen in 8 of the past 9 sessions, fueled by unexpected cooling demand and strong feedgas volumes. Chicago is set to see lows near freezing Tuesday and Wednesday.
The price rise in recent days was supported by high volumes of pipeline exports flowing to Mexico. They hit a record last week averaging 7.0 BCFD. Wood Mackenzie has raised their estimate for exports to Mexico for this summer by 0.4 BCFD. Wood Mackenzie sees exports of 6.7 BCFD from April through October. (NGI)
Technically, NG momentum signals an overbought condition. There is a double top from yesterday/today at 2.753-2.759. This is below the resistance that we have pegged at 2.768-2.773. Support comes in at 2.694-2.700.
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.