Find out the Factors that are Driving our Traders Today - 05/23/19
Energies are lower continuing yesterday's slide due to unexpected rises in supplies seen in the DOE data.
Global equities are in the red for the 4th out of the past 5 days -hurt by the underlying bad tone of Chinese US trade as the US is targeting Chinese businesses. (Reuters) The US 10 yr Treasury note yield is the lowest in a year due to trade worries. (WSJ)
Asian refiners are considering run cuts due to the weakest margins for the season since 2003. High crude costs and excess product supplies are the issue. Chinese teapots; that import 1/5 of China's crude, were working at 50% in April-May versus 64% in the 1rst quarter. Margins may improve due to 24% of Japanese runs seen being cut and Indian refiners are also cutting back. (Reuters)
Yesterday's DOE data showed a large increase in crude oil stocks of 4.74 mln bbls, taking overall inventories of crude to their highest level since July,2017. Cushing stockpiles are the highest since Dec,2017. Crude supplies rose as Midwest refiners are seen running at 82.7%, their lowest May capacity usage since 2013.
US domestic oil production rose by 100,000 bpd to 12.2 mln bpd on the week. Gasoline demand rose by 281,000 bpd to 9.429 mln bpd. Gasoline stocks in the Midwest are at their lowest level for May since 2014, as we enter driving season. (Reuters)
Technically, the energies are weak having fallen to their lowest in WTI in spot futures since March 28th, and are near to testing support at 5935-5941 momentum has turned lower, the one supportive element is that the spot WTI futures are 'trading below the lower DC bollinger which intersects in the 6005-6010 area. If the 5935 area is broken, next best support is seen in the 5817-28 area. Resistance lies at 6064-69 above the low from April of 6004, which may provide resistance.
Support in July ULSD at 20085-20100 has been broken, next support is seen at 19945-63- then at 19850-65, resistance lies at 20471-81, here to the contract is testing below the lower bollinger band, that lies at about 20070-75.
July RB support is seen at the 19009 low from early May with resistance coming in at 19530-40.
NG is up 2 cts as we await the EIA data this morning, which WSJ survey forecasts as +103 bcf. Platt's says that such a figure would be the 10th week in a row that the data would exceed the 5 yr avge for the week. The 5 yr avge is +88bcf, last year's injection was +93 bcf.
Technically, NG is still on the defensive with negative momentum. For today we see support at 2535-2536, then 2514-2516. Resistance above lies at 2595-2598.
There are mean reversion set ups in the June /July and Oct /Jan NG spreads, the June July mean reversion implies that a settlement of July greater than 1.6 cts vs June should support July. While the opposite exists for the Oct-Jan, here a settlement of Jan less than 34.8 ct premium to Oct should see the Jan lose some ground.
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