Find out the Factors that are Driving our Traders Today - 03/27/19

RB is lower while ULSD and crude oil are near unchanged after trading lower for much of the overnight session as crude oil data from the API's disappointed. Product stockpiles fell more than anticipated.

API             Forecast                   Actual

Crude oil     -0.4/-2.2                    +1.9

Gasoline      -2.6/-3.6                    -3.5

Distillate      -0.8/-1.6                    -4.3

Runs            +0.4%                        n/av

Cushing         n/av                        +0.7

Four major oil trading houses expect the Brent oil price in 2019 to largely linger in the $60 dollar area with a slight price rise possible in the second half of the year due to a tightening market with one of the houses citing end of turnarounds as a catalyst, while others point out OPEC's desire for higher prices. (Reuters)

Lyondell was said to have 14% of its 263,776 bpd refinery offline due to shipping limitations in the Houston Ship Channel, even as ships were being allowed into the contaminated area but only in daylight. Heavier laden ships that cause too great a draft were still not allowed in the Channel, 63 ships were still waiting to move either in or out of the Channel Tuesday. Only 1 ship may move thru the Channel per hour during daylight hours and only 1 barge per 1/2 hr. There are 4 refineries near the Ship Channel that may be affected by the limited shipping. They are the above mentioned Lyondell and Shell Deer Park, Valero Houston and Petrobras Pasadena. (Reuters/Platts)

The blackout in Venezuela since Monday is said to have idled ships in the main export terminal with none having left the terminal from Sunday to Tuesday, while also affecting 700,000 bpd of crude processing from extra heavy oil to exportable crude grades at 4 plants. (Reuters) Regarding Venezuelan output going forward, an IEA official warns that output may suffer further if US oil workers are forced to leave there. US oil services companies have contracts that continue thru July 27th. (Reuters)

Strength in regional crude prices in Colorado and Nebraska and outages from winter and seasonal road transport restrictions are expected to limit flows of oil to Cushing in April. Tuesday the cash April/ May WTI spread traded flat, rallying 15 cts from the last value seen when the April futures contract expired and the start of the three-day rebalancing window last week. (Reuters)

The Russian Energy minister said Tuesday that they will meet their 228,000 bpd output cut target by the end of March. In mid-February the output cuts were seen at 80,000-90,000 bpd. (Platt's)

Technically, the Brent and ULSD contracts are stuck in ranges. The WTI has neutral momentum; while RB for May seems to be creating a wall of resistance over 1.90. May WTI has a double top of resistance from yesterday/last week at 60.38-39, above which resistance is seen at 60.79 with support lying at 5923-26 then 5868-74. We note that the May 19 Dec 19 spread rose today to flat, trying to fill a gap that lies up to 5 cts May over December. Momentum is overbought for the spread with support for May seen at -27 cts (today's low) then at -37 cts. A settlement of December premium greater than 27 cts would go a long way to signaling that the spread had likely topped out.

June Brent has been basically in a range of 64.50 to 68.50 for the past 5 weeks. For today we see support at 6694-98 and resistance at 6776-77.

May ULSD support lies at 19750-64 then 19669-80 and resistance at 2.0000 then at 20155.

May RB has now 5 consecutive highs above 1.9000 with momentum turning negative. A settlement below 1.8840 would signal that the market has failed above 1.9000. For today we see resistance at 1.9089-19110 then at yesterday's high of 1.9223, with support lying at 18842-61 then 18664-81.

Futures are down 5 cts in the front 2 mths as NG April futures expire today, with volatility and trading volume  on the CME having been low the past 2 sessions. Yesterday's volume is said to be 221,278. (WSJ source)

NG prices in the Waha West Texas Hub have traded at negative value in recent days with a Natural Gas Intelligence editor saying he has never seen them this steep. Pricing heard as low as minus 75 cts, while the Henry Hub pricing was near $2.75. Natural gas Intelligence says natural gas flaring in the Permian Basin could exceed 1 Bcf/d at some  point this year before the first of the major pipeline takeaway projects, underscoring the excess supply there.

Technically, NG remains soft as May futures have fallen to a fresh one month low as shoulder season demand takes  hold in the coming weeks. Momentum is still negative.  Support at 2.720 has been broken, support seen at 2.699-2.702 being tested (the low is 2.698) then good support lies at the 2.670-2.673 area with resistance lying at 2.749-2.751 (the high overnight is 2.750).

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