Morning Update 04.22.21

Overview

Energies are higher now likely due to production concerns in Libya. Prices were weighed down overnight by Covid-19 concerns. Today, India reported a record number of new Covid-19 cases as the situation has gotten more dire in some regions there and most hospitals are at capacity and running out of oxygen. (Reuters) 

The market is also worried about rising cases of Covid-19 in Japan, with Tokyo and Osaka both being on the brink of imposing curbs. (WSJ) 

The energy market also reacted somewhat negatively to the DOE data seen yesterday. Crude supplies rose by 0.594 MMBBL, while a draw of at least 2.4 MMBBL was expected. Also, some point to the sharp drop in the amount of product supplied. It fell by 1.566 MMBPD. Product supplied is considered a proxy for demand. Crude supplies rose even as imports fell by 447 MBPD. One bright spot was the increase in gasoline demand. Gasoline demand hit its best level seen since last August at 9.104 MMBPD. 

OPEC and Russia are scoffing at the U.S. House of Representatives passing an anti-trust bill aimed at them. "This law is already a hundred years old," Russian Deputy Prime Minister Alexander Novak said. "If it could not happen under Trump, it will not happen now," one OPEC delegate told S&P Global Platts. 

An Iranian source says that it would take Iran three months to raise oil exports to where they were under the (now suspended) 2015 nuclear deal. (Platts) 

Libyan oil production has slipped to about 1 MMBPD from a recent peak of 1.3 MMBPD. Another National Oil Corp. subsidiary has warned that it may have to shut-in production within 72 hours due to financial issues as budget funding has been lacking from the government. The U.N. Libya mission said on Thursday that it was concerned by a shutdown of oil output at Hariga port and indications of coming production shutdowns elsewhere. (Reuters) 

The gasoil cash differential in Asian trading has fallen to a five month low as refiners ramped up production too fast and the demand picture has turned bearish with the rise in Covid-19 cases. The cash differential has fallen to -44 cents. Two weeks ago it was -4 cents. (Reuters) 

The International Air Transport Association has lowered its global traffic outlook. They see traffic projections for this year reaching only 43% of 2019 levels, down from their 51% estimate made late last year. They cited vaccination delays and "governments' risk aversion" in lowering their forecast. (Reuters) 

Technicals

Technically, the energies have negative momentum. 

WTI support in June is seen at 6038-39. Resistance lies at 6253-63. 

June RB support lies at 1.9638-54. The low overnight is 1.9665. Resistance lies at 2.0136-55. 

ULSD for June sees its support at 1.8397-1.8408, which is a double bottom from yesterday/today. Resistance to the upside lies at 1.8775-90.

Natural Gas

NG is weaker due to lower heating demand seen next week than was previously anticipated. 

Today's EIA storage data is forecast to show a slightly bigger than average injection. The WSJ survey is calling for storage to build by 47 BCF. This is above the five year average build of 37 BCF. Last year's build was 47 BCF. 

The Waha Hub discount to the Henry Hub narrowed to -15 cents yesterday, which is near historic highs, according to Platts. The narrow discount is due to good demand from the Gulf Coast and from the West Coast. Cash basis at the SoCal Gas city-gate price has averaged over 80 cents – up 25 cents from March and nearly 90 cents higher compared with its corresponding year-ago average. With Texas LNG feedgas demand at a record high 4.35 BCFD this month, total Texas gas demand has been propelled to its highest spring season level ever at an estimated 15.1 BCFD in April. 

Technically, NG has negative momentum. Our support at 2.650-58 has been tested with a low of 2.657. Below this, we see support at 2.605-09. Resistance above is seen at 2.724-25. 

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.