Learn the factors that are driving our traders today! 06/05/18
Liquidity Energy Morning Report 06/05/18
Energies are lower led by Brent as a report from Bloomberg has the US having asked the Saudis and other OPEC producers to increase their output by 1 mln bpd.
A Reuters story has analysis of the cost of shipping physical crude from Houston telling a different story than the futures markets regarding WTI vs Brent pricing; with the cost of free on board crude loading Houston as of June 1 $7.90 over the CME WTI spot futures price. While Brent futures are seen at a small premium to Nigerian and Angolan crude, the end analysis stated that Angolan crude was just 63 cents more than that loading in Houston. Once figuring in the longer shipping haul from Houston to Asia, the US price advantage disappears. Looking at the US crude prices later in the year and the cost of US crude seems even less advantageous.
Enbridge announced Monday that they were scrapping their plan to stop shippers from claiming more space than they can use on the key pipeline moving crude from Alberta to the US , Western Canadian Select crude rallied WTI (Bloomberg).
The energies have made fresh lows for this move and in either price action nor momentum are positive. Our suggestion yesterday that shorting WTI below 65 dlrs was not good risk/reward seems premature but the nearly oversold momentum remains a cautionary signal for WTI bears Preliminary data from the CME for futures trading from yesterday shows a large drop in open interest for ULSD and (possibly) WTI which we suspect is mostly long liquidation.
For today WTI spot futures have support at 6411-16 then 6361-67, with resistance lying at 6551-56.
Brent spot futures have seen their DC momentum turn negative and falling below recent lows at 7449-54, support is seen at 7309-17, resistance at 7541-47 (the high today is 7574).
RB open interest as per CME preliminary data from yesterday's activity shows a large increase; which we suspect is mostly fresh shorts For today spot RB futures have support at 20783-88 then 20605-12, with resistance above seen at 21297-21316 (the high overnight is 21332). One supportive element here is the rebound in the front month spread off the 75 pt level, with resistance just above 130 in sight.
ULSD spot futures have support at 21074-87 then 20910-15, resistance comes in at 21523-37 (the high is 21593).
NG is down 1 ct as the market has formed a bit of a wall in the 2980-2988 area from the past 3 sessions' highs Yesterday's fall in prices seemed due to "a (weather) pattern with cooler risks in the 2nd 1/2 of June " as per a weather group's analysis posted on the Dow Jones news wire.
Momentum remains negative for the spot futures with some resistance seen at 2939-44 via light chart congestion and pivot numbers, then at the "wall" mentioned above in the 2980-88 area Support comes in at 2884-87 via pivots then support is seen at 2844-47.
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Liquidity Energy LLC
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