Find out the Factors that are Driving our Traders Today - 03/18/19
Energies are mixed as OPEC / Non OPEC met over the weekend and decided to keep their output cuts in place until June. They have cancelled a planned April meeting; deciding they would rather wait until June to assess market conditions, the Russian & Iraqi ministers said that US sanctions are injecting uncertainty into the market. (Reuters)
A 2nd ship broker has ceased doing business with PDVSA, further undermining PDVSA's ability to supply crude oil to the global market.(Reuters) WSJ notes that a brain drain from Venezuela, corruption and a lack of maintenance have hurt the electrical grid there with blackouts likely to increase in number.
Baker Hughes reported Friday that the US oil rig count fell by 1 unit in the latest period, bringing the total number of rigs working to the lowest level since April,2018. (Reuters)
CFTC data out Friday showed that money managers raised their net length in WTI on ICE/CME by a total of 8,471 contracts in the period ended 3/12. ...RB net length rose by 6,727 contracts and ULSD net length fell by 2,386 contracts in the same period...much of the WTI net length rise on CME was due to short covering.
The ULSD total net length now is down to 7,919 contracts, which to us means a neutral stance for the contract as per the money managers' position.
Technically, we see RB as having peaked, DC momentum points lower -and weekly continuation chart based momentum is getting overbought. For today we see RB spot futures with resistance at 18802-22 and support at 18384-97. One item that might keep RB firm for now is a fire at a tank terminal in Texas that stores naphta, which is used in making gasoline. (ABC news out of Houston)
ULSD remains the weak link in the energies, support for April futures is seen at 19452 with resistance lying at 19785-91 then 19984-88.
WTI for May is showing a nearly overbought status on its daily chart (we have switched to May as the April WTI contract expires Wednesday), May futures for WTI have resistance at 5925 then 5969 with support seen at 5826-28 below the overnight low of 5837.
May Brent futures have support at the low seen overnight at 6669-6670, with resistance lying at 6771-76 then at the recent high of 6814.
NG futures are up 2 cts, after trading most of the overnight session in negative territory.
NG has a double top from Thursday/Friday, having filled the gap from a week ago, signaling to us a short term resistance area and peak, now the question is where are we going to see good end user interest for buying NG given that storage is so low historically. NG demand is seen slowing as temperatures are set to rise in much of the US in the coming week with the advent of spring.
Volume in NG futures on the CME on Friday was lackluster again at 213,897 contracts, telling us that there is a lack of conviction in the market, a range bound contract that is priced relatively fairly.
Technically, for today we see support for April NG at 2762-2766 (below the overnight low of 2773) with resistance seen at 2856-57. We may see some light support at 2787—2790 and some light resistance at 2821-2822.
Friday Baker Hughes reported that the NG rig count was unchanged in the latest period.
Friday's CFTC Commitment of traders report showed that money managers raised their net length in the 4 major NG options/futures contracts by a total of 10,197 in the week ended 3/12. Within that number, longs on the CME rose by 13,050 contracts.
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