Find out the Factors that are Driving our Traders Today!- 12/05/18
Energy prices are mostly unchanged at present, but they are well off their overnight lows as the market awaits the OPEC meeting that starts tomorrow. Saudi oil minister Falih says that is it "premature to say what will happen" -but he added "most likely" there would be a cut. (Bloomberg) The Omani minister said that any agreement would be for the first quarter or 6 mths of 2019. Pressure is growing for Libya and Nigeria to join any cut agreement -they have been exempted until now. (Reuters)
One US oil producer CEO is quoted on Reuters as saying that the largest US oil field could see a 10-20% drop in activity next year if prices stay here. Break evens for US shale producers are said to be in the $43-$48 range according to an analytical firm cited in the article. Mideast producers have much lower break evens-but need much higher prices for their governments' budgets.
A power outage on 2 Canadian pipelines has curtailed supply to the US with no timetable for resumption of service. The Keystone line has a capacity of 590,000 bpd. The Enbridge line is shut on part of its grid, the total line capacity is 2.9 mln bpd (WSJ/Reuters)
Libya has closed its oil ports due to bad weather -with the likelihood of a cut of 150,000 bpd of output from a field there by Thursday A M due to lack of storage facility at the terminals. This cut would be in addition to the 150,000 cut seen last Friday. (Platt's)
The Saudis as expected cut their OSP to Asian customers for their flagship A-Light grade by $1 for January - while raising it by 60 cts to NW Europe and by 50 cts to the US; signalling their intent to continue to focus on supplying Asian customers. (Reuters)
API Forecast Actual
Crude Oil -1.2/-2.39 +5.4
Gasoline +0.9 +3.6
Distillate +1.1 +4.3
Cushing n/av +1.4
Runs +0.5% n/av
The markets dropped post API on the bearish data seen across the board. We suspect that the weakness in the stock market did not help the energies either late in the day Tuesday, as the Dow fell 799 pts/3.1% and the Nasdaq 4% on Tuesday, ahead of the day of mourning being observed today in the equity and interest rate markets. Also, the spread between the 2 yr and 10 yr US Treasury notes narrowed to 10 basis pts; according to Marketwatch that is the narrowest it has been since 2007 and is a downbeat reflection of the economy. The DOE's Petroleum report is to be issued Thursday at 11 A M NY time.
US Gasoline prices at the pump fell on Monday to prices below those of a year ago, this is the first such time in 18 mths that that has happened. End Nov. pricing at the rack hit multi yr lows - Platt's reported.
The NY RB vs Brent crude oil crack has been negative for several weeks now and the Houston regular gasoline vs WTI crack is said to be down to $2 from year ago level of 12 dollars (Platt's) The Feb Brent vs march RB still has a negative crack of about 40 cts. as per the last values we see traded late Tues.
Technically the energies remain positive in their momentum and have held support below. WTI has support at 5203-05 (the overnight low is 5216), resistance comes in at 5385 then 5455.
ULSD for Jan has support at 18600-08 then 18425 with resistance at 19077-97 (the latter is the high) -then at 19481.
Jan RB has support at 14100-26 -tested with a low of 14109, resistance lies at 14562-84 then 14779-81.
NG is up 8 cts in the spot contract futures as cold weather grips the eastern half of the US. The NG EIA storage data will be issued a day late, the report will come out Friday 12/7 at 10 30 am NY time.
Technically the NG DC chart shows us in the triangle congesting. The trigger points to the triangle today are 4.755 and 4.110. Momentum on the DC chart is pointing lower. For today we see support in spot futures at 4420-27 then 4358, with resistance above at 4672-4674, with light resistance below that at 4.630-4.637 (the former is the overnight high).
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